When Wayne Schwind registered the trademark for his small Oregon cannabis company in 2015, he had no idea it would turn into a David and Goliath battle for his business.
His company, Periodic Edibles, has been selling cannabis-infused caramels in the Oregon medical market for nearly a year. But as he’s been building his company, he’s also been fighting a trademark dispute from Edible Arrangements, a large national corporation that makes flower arrangements out of chocolate-dipped fruit and other items.
Edible Arrangements doesn’t want cannabis businesses to use the word “edible.” The company argues that cannabis businesses using “edible” will confuse consumers, which could impact the Edible Arrangements’ bottom line, president Rob Price wrote in a prepared statement to Marijuana Venture.
“Edible Arrangements … has filed an opposition to the Periodic Edibles trademark application because the increasing use of the term ‘edibles’ in connection with consumable foods infused with marijuana (THC) is a growing concern for Edible (Arrangements),” Price wrote. “The term ‘edibles’ is becoming widely used for candy products infused with THC, a drug that is currently identified under the Controlled Substances Act as a Class I illegal substance. Edible (Arrangements) feels strongly that use of the term ‘edibles’ or ‘edible’ with products that, but for the infusion of the THC, would be sold in similar trade channels to similar consumers, dilutes and tarnishes its famous brand.”
Schwind, who doesn’t have a lot of money to pay for lawyers, has been working through the process of defending his company by himself. He’s working with an interlocutory attorney and learning how to file motions on his own.
“Nobody recommends that,” Schwind acknowledges. “You either have to know what you’re doing or you have to learn. But my company is too small to spend $20,000 or $30,000 on a lawyer.”
Even if he had the money to hire a good lawyer, Schwind would still be at a major disadvantage. In many legal cases between small business owners and larger, national corporations, the business giant has the ability to drag out the proceedings, bleeding smaller adversaries of their relatively limited financial resources.
Helping a Community in Need
As every major news organization in the country relayed the horrors of the Pulse nightclub shooting in Orlando, Florida, Wayne Schwind began looking for a way to help the local LGBTQ community that was reeling from the tragedy.
Schwind, the owner of Periodic Edibles, produced a limited run of 1,000 cannabis-infused sea salt caramels under the “One” brand with a percentage of the proceeds going to the nonprofit Q Center, which provides support and a safe space for the LGBTQ community.
Sales of the caramels through select Portland retailers raised $2,000 for the Q Center to help the 13-year institution pay for staffing and space.
“The struggle for nonprofits like Q Center is always about funding. And when somebody like Wayne comes forward and wants to help us out, that makes a huge impact,” Q Center co-executive director Justin Pabalate says.
“Anytime there are innocent people affected like this for simply being who they are, we really need to have a larger social and cultural response,” Schwind says. “As a business, of course, we have a goal of making money, but we’re also part of the community and we want to give back. This is our small way of doing that.”
Although Periodic Edibles ultimately fell short of its initial goal of raising $3,500, the company plans to do two or three similar fundraisers a year.
In some ways, Pabalate says the LGBTQ and cannabis communities are kindred spirits. Both face a constant battle dealing with stigma and misunderstanding in mainstream society.
“They’re like a parallel to the green stripe in our rainbow,” Pabalate says. “We both face stigma, we both face frustration when the reaction to our groups is emotional rather than based in science. In the LGBTQ community that means we have things like blood donation bans, based solely on fear. In the cannabis world, fear is used to put a disproportionate number of minorities in jail. We need to break that stigma and break down those silos of thought.”
Right now, the company is focusing on getting licensed for Oregon’s recreational license program.
“After that is accomplished we can focus our attention back on the enjoyable side of the business,” Schwind says.
Because marijuana is a Schedule I illegal drug, federal trademarks are pretty much unheard of in the fledgling industry. State trademarks are easier to get — at least in places where cannabis is legal — but can still face conflict with larger national operations.
At the lowest level, there’s also something called a common law trademark, which is based on when a company begins using its chosen name. It’s not something that companies apply for at the state or federal level, but that type of trademark is also the least secure, Warner says.
To protect themselves, people who are thinking about getting a trademark, especially in the cannabis industry, should choose the words in their marks carefully, he notes.
“Trademark law doesn’t let you register something that’s a generic term or isn’t descriptive,” Warner says. “People often think the best trademark tells you what the product is, and that makes sense. But then you have a descriptive mark, and that creates problems.”
Warner notes three guidelines to avoid when it comes to selecting a trademark: Don’t use a generic term; don’t use a descriptive term; and don’t pick something that looks like an existing trademark.
Instead, it’s better to make up a word, which is known as a fanciful mark, or use a word that has nothing to do with the product, known as an arbitrary mark.
“You should use names you like, check out logos, and then talk with a lawyer to see if it makes the cut,” Warner says. “The worst case scenario is when you pick a name, you pick a mark, you get advertising, synergy, and then you don’t protect that and you end up with problems.”
If Schwind had known more about trademarks when choosing his mark for Periodic Edibles, he would have spent longer considering a fanciful mark name, he says.
“I think that’s a really good technique,” Schwind says. “It’s something I would have thought more about if I had known that it offered more protection when I got started.”
It’s also a good idea for businesses to protect a trademark in states where they might want to expand, Warner says.
Cannabis products can’t be legally transported over state lines, but companies operating in several markets need to protect their brands in each state.
The way some do that is to trademark a recipe for a product, or to classify a product as a service and protect that. In some cases, that also works for a federal trademark, although that process has grown more difficult.
“It’s a little hit or miss,” Warner says. “In the early days it was a little more hit. You could use phrases that didn’t indicate actual ingredients. So you could use a recipe with specific ingredients or seasonings, but if it’s federal, what you especially can’t do is say that recipe contains cannabis.”
Still, if you can get a federal trademark on a product, it offers protection in every state.
“With that, you can ban importation of infringing goods from outside of the United States, but you can only get that by applying and registering with the federal government,” Warner says.
Periodic Edibles released a special line of infused caramels that benefited the non-profit Q Center in Portland, OR. From left to right is Periodic Edibles operation manager Rachel Schwind, Q Center co-directors Stacey Rice and Justin Pabalate and program director Raina Daniels.
The Edible Dilemma
In the case of the word “edible,” a company like Edible Arrangements has to show that an “acquired distinctiveness” has evolved over time for its name, so that consumers associate the word in question with a secondary meaning associated with a brand. The company will also likely have to show that that word has been used exclusively with the business for some time, Warner says.
“Usually there has to be things like: How much money was spent advertising this product? Where was it sold? Are there pages where people talk about only those products using that term?” Warner says. “So a word like ‘edible’ — it has a specific meaning, especially in the marijuana industry. It’s not even a descriptive term. It’s a generic term for an entire class of products. It’s generic in the marijuana industry.”
In Schwind’s case, he registered the Periodic Edibles trademark with the state of Oregon in July 2015. It was reviewed and approved by an attorney.
After the Edible Arrangements case started in late 2015, he’s been in an almost constant process of filing motions back and forth in an effort to protect his brand. Schwind estimates the process has taken about 200 hours of his time in the past year, and doesn’t expect it to be resolved until late 2017.
“It feels like every time we take a step forward I have to learn an entirely new process,” Schwind says. “I think now, with the timeline we have laid out, this should finally end in late 2017. But the question is, should I keep doing this myself? For now, I will, and I’d probably do the same thing again. It’s been a good learning experience, if nothing else.”
Still, if he ends up losing the case in 2017, it will destroy two years worth of marketing, branding and customer recognition, he says.
“It’s hard to really define how much of an impact that would have,” Schwind says. “It will be significant. We could still keep our packaging looking similar, but customers looking for us in stores under a different name, that could create a lot of confusion. It would definitely have an effect.”
Marijuana Venture will continue to follow this story as it develops, with plans to publish a follow-up story at the conclusion of the dispute.