USPTO Issues Major Ruling for Cannabis Companies: In re Morgan Brown

On July 14, 2016, the Trademark Trial and Appeal Board of the United States Patent and Trademark Office (USPTO) refused to register the mark HERBAL ACCESS (U.S. Serial No. 86/362,968) for use in connection with "retail store services featuring herbs" on the grounds the mark was being used in connection with the sale of marijuana in violation of federal law. To read the full text of the Board's decision, click here.

The Board's Reasoning

The Board began by stating that to qualify for federal trademark registration, “[a]ny goods or services for which the mark is used must not be illegal under federal law.” In doing so, the Board appeared to rely on a previous finding that "'use in commerce,' means a 'lawful use in commerce,' and [that the sale or] the shipment of goods in violation of [a] federal statute . . . may not be recognized as the basis for establishing trademark rights.” In re Midwest Tennis & Track Co., 29 U.S.P.Q.2d 1386, 1386 n.2 (T.T.A.B. 1993) (quoting Clorox Co. v. Armour-Dial, Inc., 214 U.S.P.Q. 850, 851 (T.T.A.B. 1982)).

Reconciling these two statements, In re Morgan Brown can be read to hold that any goods or services that form the basis for “lawful use in commerce” of a mark that is the subject of a trademark application cannot be illegal.

The USPTO generally presumes that use of an applicant's mark is lawful and registration will not be refused for unlawful use in commerce unless either:

(1) A violation of federal law is indicated by the application record or other evidence (such as when a court or a federal agency has issued a finding of noncompliance); OR

(2) Applicant’s application-relevant activities involve a per se violation of federal law

An example of (1) might occur if an alcohol producer's trademark application was refused because the specimen showed a label that had been rejected by the TTAB and therefore may not be lawfully sold. With respect to HERBAL ACCESS, the Examining Attorney relied on (2), the per se violation of federal law, for the activities encompassed in the identification of services. This conclusion was based on the following evidence:

   Applicant’s specimen of use showed two photos of the retail establishment bearing indicia of a medical cannabis dispensary; and

   Applicant’s website displayed a map with the wording "Marijuana for the Masses" and advertised to "Call or stop by today and find out why people consider our marijuana to be the best of the best!"

Applicant attempted to argue that there was nothing unlawful about his recitation of services because selling "herbs" is not illegal, and therefore Applicant was engaged in a lawful use. Applicant acknowledged that he "may also sell marijuana" in addition to legal herbs, but noted that doing so was permitted by Washington state law.

The Board was not convinced. It stated that the evidence of unlawful use was based on Applicant's current activities and is not dependent on what he may do in the future. The fact that lawful use is also contemplated by the identification does not help Applicant's cause, and the Board it was entirely proper for the Examining Attorney to look to evidence such as Applicant's specimen of use and website to determine whether the "herbs" identified in the description of services included marijuana. Finally, the Board confirmed what we already know: that those who sell goods or services that are illegal under federal law, but legal in their respective states, cannot obtain federal trademark protection for a mark for use in connection with the unlawful goods and services. 

Taking the specimen and website together, the Board found that Applicant’s retail store services include the provision of an illegal substance. Because the evidence showed that HERBAL ACCESS was being used in connection with marijuana and the sale of marijuana necessarily falls within the services identification, the Board held that Applicant's retail store services violate the Controlled Substances Act.

Implications for Cannabis Businesses

The full ramifications of the Board's decision, which is precedential, remain to be seen. A narrow reading of the decision suggests that as long as the specific goods and services listed in the application could not form the basis of an unlawful use, the application should not be refused on the grounds that the goods and services violate federal law. Under this reading, a cannabis dispensary's application to register its trademark in connection with retail store services featuring lighters and t-shirts would not be refused on the basis that the services violate federal law even though some of the dispensary's retail services do violate federal law.

Under a broader reading of the decision, a dispensary's trademark application will be refused if it includes retail store services even if the description of services includes only lighters and t-shirts because some of its (other) retail store services do violate federal law. This same broad interpretation could also suggest that a dispensary's application will be refused if it includes any services in International Class 035 simply because some of its services that would be properly categorized in Class 035namely, the retail sale of marijuanado violate federal law.

Finally, an incrediblyand in this author's opinion, absurdlybroad reading of the Board's decision suggests that businesses may not secure a trademark registration for a mark that is used in connection with any goods or services that violate federal law. 

Under any reading, cannabis businesses seeking federal trademark protection will need to tread more carefully after this decision. Applications that have recently been approved for publication could be pulled for reexamination in light of this decision, and applicants with allowed applications may face a greater uphill battle when it's time to submit evidence of use. Attorneys filing trademark applications for cannabis clients should closely follow developments at the USPTO over the next few months as the full impact of this decision trickles down to examining attorneys.