Last summer, we reported here and here on the trademark infringement lawsuit filed by Veritas Fine Cannabis (“VFC”) against Veritas Farms. In late August, I reported that Veritas Farms was filing for dismissal because VFC does not have the federal common law trademarks to be enforced. Since the motion was filed, VFC filed an amended complaint and Veritas Farms filed a second motion to dismiss, largely for the same reasons but also with arguments based on the doctrine of illegality (which we wrote about here earlier).
Unfortunately for VFC, Judge Michael E. Hegarty issued a recommended order whereby the court upheld Veritas Farms’ motion for dismissal – and dismissed the trademark infringement and related claims without prejudice to (i.e. VFC cannot change or retry those claims). . For the cannabis aid industry, however, the regulation makes it clear that the illegality doctrine will not prevent all services related to marijuana from receiving trademark rights.
In its motion, Veritas Farms argued that VFC’s business and products (which primarily relate to the provision of information about cannabis) are illegal under federal law under the Controlled Substances Act and therefore not eligible for trademark protection. VFC replied that providing information services about cannabis is not illegal and that they are eligible for trademark protection.
Judge Hegarty began his analysis by stating the standard:
A trademark is qualified for registration and associated benefits once the trademark owner has used it [the mark] in trade “or has a serious intention to do so, and courts have long ruled that the trade must be” lawful “in order to meet the” use in trade “requirement. (Quotes omitted).
Regarding the standard, he agreed with Veritas Farms that federal trademark law can only protect trademarks that are essentially legal under federal law – and therefore protection of marijuana-related goods is prohibited.
Even after the 2018 Farm Bill was passed, the USPTO [would] Continue to refuse registration if the services identified in an application are cannabis that meets the definition of marijuana and includes activities prohibited by the CSA.
However, the agreement ends there. Judge Hegarty then examined the definition of marijuana under the Controlled Substances Act:
all parts of the Cannabis sativa L. plant, whether growing or not; the seeds for it; the resin extracted from any part of such a plant; and any compound, preparation, salt, derivative, mixture or preparation of such a plant, its seeds or its resin.
With this definition, he affirmed that attempting to label goods or services related to marijuana, its parts, or any of its uses is “not permitted under federal law”. This definition was not illuminating for VFC’s trademark for providing information services – and ultimately Judge Hegarty decided that the trademark protection sought by VFC is not illegal:
… the plaintiff [VFC] tries not to label goods and products related to cannabis, but rather to provide information about cannabis and cannabis products. The Court recognizes that this is a gray area of the law. Given the arguments of the parties and the limited case law and other relevant authorities, the Court does not find that the provision of information in this context is prohibited. In other words, providing information related to cannabis is not illegal under federal law and is therefore trademarked.
This recommended arrangement is a positive sign for the entire industry and signals a growing awareness of the courts that this type of “gray area of the law” has to be proactively clarified again and again.