Last year I wrote about a surge in trademark litigation between cannabis companies. This type of litigation differs from previous cannabis-related trademark litigation, where non-cannabis companies with established brands have sued cannabis companies for trademark infringement.
In particular, I highlighted the litigation between Harvest dispenser Cultivation & Production Facilities, LLC based in Arizona (based on as “Harvest of Arizona”) and Harvest on Geary, Inc. / Harvest Off Mission, Inc., based here in San Francisco (based on as “Harvest of California”)wherein Harvest of Arizona sued Harvest of California in Arizona for stealing HARVEST’s name and logo.
The part of legal action submitted in 2017 alleged trademark infringement, willful breach of contract and business relationship, conversion, unfair competition and misappropriation of trade secrets, fraud, violation of the Arizona Racketeering Act, violation of the Arizona Consumer Fraud Act and unjust enrichment. In its complaint, Harvest of Arizona, which was founded in 2011 and started using the HARVEST brand in 2012, claimed to own retail pharmacies and cultivation / manufacturing facilities in Arizona, Nevada, Illinois, Maryland, Massachusetts, Michigan and Florida. It had no presence in California.
in the In 2018, Harvest of Arizona announced plans to expand into California, Harvest of California, which owns California trademarks for the HARVEST name, sued Harvest of Arizona in the California Supreme Court for trademark infringement and unfair competition in California. Harvest of California Noted in his complaint that this is a straightforward trademark infringement case, but that because the parties are in the cannabis industry, only state law applies. The federal trademark law is not applicable.
That dispute ended, but earlier this year another trademark lawsuit involving Harvest of Arizona and the HARVEST brand was ruled by a judge at Faulkner County Circuit Court in Arkansas, and Harvest of Arizona lost.
By doing Arkansas case, Harvest cannabis dispensary (“Harvest of Arkansas”)The locally owned small business in Conway, Arkansas received an injunction banning two establishments, a Little Rock pharmacy and a Newport cultivation facility, managed by Harvest of Arizona from using the HARVEST brand. Harvest of Arkansas became known as “Harvest” in September 2017 when it applied for a license from the state. And while Harvest of Arizona was using the name “Harvest” prior to that date, it was not in Arkansas, giving Harvest of Arkansas priority rights to the mark in the state of Arkansas.
This case highlights one of the greatest challenges for cannabis companies – the inability to obtain federal trademark protection for cannabis goods (or goods that violate federal law). As cannabis MSOs expand into multiple states, their lack of federal trademark protection makes them vulnerable to situations like this where companies beat them in a certain geographic area and use the brand first.
In the USA, the use of the trademark in common law creates trademark rights Trade and are often geographically limited. The result of this lack of federal trademark protection coupled with the ability to obtain state trademark rights and / or geographically limited Common law rights are that cannabis operators receive a patchwork of trademark protection, which depends on where they are given an operating license.
While there are strategies these companies can and should employ to protect their trademark and IP rights as much as possible (this is something I advise my clients about a lot), there is and will not be a perfect solution until the legal status of marijuana under federal law changes (or unless the USPTO changes the rules).
Unfortunately, we assume that this type of dispute will occur more frequently and we consider it serious Obstacle to cannabis companies effectively developing and enforcing national brands.