As we often point out on these pages, cannabis companies cannot register trademarks for many of their core products. The US Patent and Trademark Office (USPTO) “refuses to register trademarks for goods and / or services that are clearly in violation of federal law, regardless of the legality of the activity under state law.” Marijuana as defined by the Controlled Substances Act (CSA), but also many CBD products such as foods that are banned under the Federal Food, Drugs, and Cosmetics Act (FDCA).
It is not surprising that the companies affected have faced numerous challenges with the existing framework conditions. One such challenge comes from a company called Joy Tea, which had a trademark application (88640009) for CBD beverages that were rejected by the USPTO.
When the USPTO initially denied Joy Tea’s request, it found that “the introduction is illegal [into interstate commerce] Foods to which CBD, an “Approved New Drug Item”, has been added … regardless of whether the substances come from hemp. “The USPTO also noted that Joy Tea’s merchandise, as described, did not specify the source of CBD and possibly covered merchandise that was defined as marijuana under the CSA (i.e. containing greater than 0.3% THC).
At the suggestion of the USPTO, Joy Tea changed its description of the goods to overcome the opposition under the FDCA. In the new description it was made clear that “Ingredients [are] Obtained exclusively from hemp with a delta-9-tetrahydrocannabinol (THC) concentration of no more than 0.3 percent based on the dry weight. “While this change resulted in rejection under the CSA, the reasons for the rejection under the FDCA have not been clarified. Joy Tea is now appealing the decision to the Trademark Trial and Appeal Board (TTAB).
To fully grasp the nuances of the dispute, it is important to understand the difference between the two most common bases for a trademark application: actual use and intentional use (ITU). When a registrant submits an application based on actual use, they are claiming that they have already used the trademark in stores. In contrast, an ITU application only requires serious intent to use the trademark on the part of the registrant.
Joy Tea’s main argument is that it should be allowed to register the trademark on an ITU basis as the goods described (CBD drinks) are assumed to be legal at the time of registration. In essence, Joy Tea is saying that its intention to use the brand on CBD drinks depends on those drinks becoming lawful. As a result, there will be no unlawful use to affect the USPTO.
However, the USPTO disagrees with this stance. According to the Agency, legality is “determined at the time the application is submitted and not what may or may not be legal in a few years”.
We assume that the USPTO will prevail. A decision in favor of Joy Tea would require the USPTO to allocate resources for examining the trademarks applied for, which may never be registrable. It could also force the agency to continuously monitor the state of the law in various areas.
With all this said, Joy Tea and his council deserve a warm “well played”. If Joy Tea catches on there will be a dramatic before and after sign when it comes to cannabis brands. Cannabis companies should prepare to submit what are known as Joy Tea applications. Just in case.