By Jeremy Kapteyn, Ph.D., Chair, Rose Law Group Intellectual Property and Technology Department
I recently had the opportunity to speak briefly at a cannabis industry trade association meeting in Arizona. As I started to prepare a short presentation, I considered which intellectual property topics and points were applicable to a wide range of developing businesses in the industry. I only had a few minutes to speak and wanted to convey something of value to as much of the audience as possible. When I tell people that I’m an IP attorney, they often respond with a curious fascination about patents, so this was an obvious choice for a “sexy” presentation topic. However, I knew it was unrealistic to expect that a substantial proportion of the audience would have a practical interest in enhancing their understanding of patent law. Instead, I settled on two topics that directly affect almost every company – establishing a strong brand and ensuring clear ownership of intellectual property assets – and outlined some practical takeaways touching on these themes. The following article is the first of a two-part series expanding on those takeaways, and this installment details two basic but valuable considerations related to the topic of branding and trademarks.
Establishing and building a strong brand is fundamental for any business. Of course, a brand is far more than a name and a logo. There are many definitions of the concept of a “brand,” but most describe in some form a consumer’s emotional relationship with a company and the goods or services it offers. I like the simple phrase “emotional aftertaste” used by Ze Frank. The emotional relationship this and other definitions seek to capture stems from the consumer’s experience and perception of the quality of the product, the company’s reputation, and how the company distinguishes itself to consumers generally. Thus, a brand includes many factors that can only be established with actual commercial activity touching actual consumers over time and are outside of the scope of this article. However, a good trademark and/or logo are key to enabling consumers to successfully distinguish a company’s product in the marketplace. For this reason, I almost always suggest that a new or growing business take the following actions.
Have a trademark clearance search performed
A trademark clearance search involves searching various government agency and business databases as well as the internet and other sources to ensure that a brand or trademark is not in use by others and identify marks that might be confusingly similar to the trademark of interest. Performing such a search is particularly important in the early stages of branding a new company, or for an established company adopting a new brand. Too often, I have seen companies adopt and launch a brand, only to later learn that another business was using a similar brand for related goods or services. Aside from the legal risk of trademark infringement that this creates, there is always a tremendous amount of stress and consternation for the business owner that can generally be avoided by doing a clearance search.
Trademark clearance searches are a good idea for any business, regardless of the market or industry they are in. However, such searches are particularly important in the cannabis industry. The unique legal and regulatory conditions in which the cannabis industry operates and the restrictions on interstate commerce have created an unusual, state-by-state compartmentalization of the market. While doing pre-screening searches (i.e., thoroughly Googling your shortlist of prospective brand names) is a great step to take, a specialized trademark search provider can quickly and efficiently perform a comprehensive search against numerous databases or proprietary databases that they maintain. A trademark attorney can help you obtain such a search and can also review the results and advise you regarding conflicts or risks that may be present in the results.
More established companies that have never performed a clearance search should also consider taking this step prior to making any significant investment in expanding their commercial activities. I recently encountered a situation in which a company (“Company X”) made a substantial investment in tooling and manufacturing a product with their brand molded into it, only to later learn that another company had filed a federal trademark application for a very similar mark for related goods prior to Company X’s commercial launch. Company X had also filed a federal trademark application, but had not performed a clearance search ahead of doing so. They learned of the conflict in a refusal issued by the USPTO. Even the simplest knockout search of the federal trademark database would have revealed the conflict, and Company A would have had the opportunity to adjust its branding and product development strategies. Instead, they found themselves heavily financially committed to a position with a much higher risk profile than they were comfortable with.
The costs of a trademark clearance search are low. A comprehensive federal, state, and common law search performed by a specialized search firm can be obtained quickly and inexpensively. The fees for trademark attorney review of the search results are also generally low. For design marks (i.e., logos) or for marks with many potential conflicts, the search and review costs can be somewhat higher. Skipping the clearance search step poses a risk that the initial trajectory a company takes in its new brand launch could be headed on a collision course, and the costs of a course correction are often much higher than those of a search.
As a follow-up note, any business owner in the process of selecting a brand should become familiar with the “spectrum of distinctiveness.” A good primer on this topic from the International Trademark Association (INTA) can be found here. Use this framework to help choose candidate brand names that are unique and non-descriptive and have the inherent potential to be strong trademarks.
Take steps to protect your trademark
Business that have adopted a brand should take deliberate steps to protect it as a trademark. Some of these steps are free, at least insofar as they don’t entail legal formalities or fees. One such step is to ensure that they are using it properly – a trademark should generally be used as an adjective, not as a noun (or verb). A trademark serves as an indicator of the source of a good or service, never as the name of the good or service itself. I frequently see new brand owners using their trademarks improperly or inconsistently in this regard. Marking your new brand with the TM symbol is also a good step to take to provide notice to the rest of the world of your interest in the brand as a trademark. Include this symbol with prominent uses of your trademark on a website, packaging, or promotional materials (including social media). INTA provides excellent trademark use and marking guidance here.
Businesses begin to develop common law legal rights in their trademarks as soon as they begin using them commercially. Varying degrees of statutory legal protection can be pursued in addition to common law legal rights. State trademark and trade name registrations are generally inexpensive to obtain. These registrations can provide certain limited benefits under state law, and can also confer enhanced notice benefits (e.g., these registrations are more readily searchable by third parties).
Many business owners in the cannabis industry are generally aware that there are challenges to obtaining federal trademark registrations for cannabis-related goods and services. However, myths and misinformation abound, and this is a dynamic area for trademark practitioners and the USPTO. Approaches other than the go-to strategy of seeking a registration of a company’s trademark for use on apparel or some other ancillary good are being implemented with some success by trademark practitioners that work with clients in this industry. Be wary of using even very experienced trademark attorneys that do not provide cannabis industry-focused services. The USPTO database is littered with examples of ill-informed application and prosecution strategies, executed by trademark attorneys at otherwise highly reputable IP firms, that an industry-focused attorney most likely would have avoided. However, USPTO practice can also be inconsistent and unpredictable, and even experienced cannabis industry trademark attorneys can’t necessarily guaranty successful registration of a cannabis-related trademark.
Ultimately, your brand protection strategy should be tailored to your business goals. Not every cannabis industry business needs to invest in pursuing federal trademark registrations. As you take steps to establish and protect your brand, look for counsel that understands the nuances of the industry and is also interested in understanding your business goals and matching a trademark strategy to those goals.
I hope that cannabis industry business owners will find this article informative and useful. Stay tuned for the next installment, which will include some practical pointers for identifying and defining other IP assets and steps that businesses can take to help ensure clear ownership of those assets and to avoid IP ownership disputes.
