As most business owners know, having protection over one’s brand is important, and trademarks are a popular way of protecting that brand. For many years, having federal trademark protection was the “gold standard” of trademark protection. However, there exist other forms of trademarks which can be excellent tools for the right type of business, such as for cannabis startups that touch the cannabis plant.
There are three main bases that one can have trademark protection:
Federal Trademark Registrations
Federal trademark registration are what most people think of when you say you have a trademark. Authorized by the Lanham Act (15 U.S.C. §1051 et seq.), federal trademark registrations offer the owner nationwide constructive use and notice. That means that if you have a federal trademark registration, no one else can use their lack of knowledge of your trademark as a defense against infringement. Further, having a federal trademark allows you to properly request U.S. Customs and Border Protection to prevent infringing goods from being imported into the U.S. and its associated territories. Another benefit is that you are automatically allowed to enforce your trademark in federal court, which can have a number of advantages of the infringer is located in another state.
Common Law Trademark
Common law trademark rights are created simply by using a mark in commerce. While this seems like a great option due to its simplicity, there is a major caveat. Common law trademarks rights are limited to the geographic area in which the trademark is used, so the owner of a common law trademark only has protections in the regions that they’re already doing business. If someone is using an infringing mark in a different territory, an assertion of common law trademark rights against them will most likely not be successful.
State Trademark Registrations
State trademark registrations are pretty similar to federal trademarks, with the major exception being that instead of being conferred nationwide protection, only statewide protection is granted. Another large exception is that most states require that you actually use the mark before you are allowed to get a state trademark registration. This is in stark contrast to the federal system, which allows people to stake out a claim in a mark that they have a bona fide intention of using in the near future.
While there are the aforementioned drawbacks to state trademark registrations, they do offer some benefits that a federal trademark registration does not. Namely, state trademarks are available to businesses who do not qualify for federal trademark protection. In order to qualify for federal trademark registration, one must be doing business across state lines. So, if for whatever reason you only do business in a single state, you are relegated to common law trademark rights or a state trademark registration.
Cannabis Companies and State Trademarks: A Match Made in Heaven
As mentioned above, federal trademark registrations are the “gold standard.” However, many canna-businesses find themselves unable to get a federal registration. Any company that touches the cannabis plant cannot do business across state lines, so they fail to qualify for federal protection. These companies must choose between pursuing common law trademark rights, a state trademark registration, or both.
For those paying close attention, you may ask, “But Matt, if common law trademarks are limited to a geographic region, and cannabis companies are selling all over the state, what benefits does state registration offer over common law registration?” The answer to this very important question is that a state trademark registration gives you more rights than common law trademarks rights. Common law trademarks are sort of an “implied trademark” which others cannot be on constructive notice on. That is, it is on the owner of the common law trademark to police their mark as there is no way for a potential infringer to know that you have and/or are seeking protection over elements of your brand. In contrast, a state trademark registration allows you to put potential infringers on constructive notice of your use of the mark within the state. This is so that when you go to enforce your trademarks against an alleged infringer, they cannot claim that they did not know of your trademark rights within the state. Further, if (when) cannabis becomes legal under federal law, having a state trademark registration will serve as excellent evidence of a company’s priority of use when they are seeking to expand nationally (in trademark land, the first one to use a mark often has superior rights to any subsequent users).
*That said, for canna-businesses that do not touch the plant, federal trademark protection is still very much available. As such, many cannabusinesses can still avail themselves of the protections offered by the United States Patent and Trademark Office. The only additional hurdle for these types of cannabusinesses is that they must certify that they are in compliance with the Controlled Substances Act.
Exactly what type of trademark protection to pursue and when to pursue it will vary on a case-by-case basis, but if you’re a cannabusiness owner building a brand, it is important that you are aware of the options that you have.