Cannabis Trademarks: Immoral and Scandalous Matter?

Cannabis trademarksIt is a widely accepted reality that obtaining a federal trademark registration for use on cannabis-related goods presents a host of unique challenges, but what aren’t widely discussed are the United States Patent and Trademark Office’s (USPTO) reasons for rejecting many cannabis trademark applications. The reason we hear frequently touted for rejection is the Lanham Act’s prohibition of marks that contain “immoral or scandalous matter.” However, this typically is not the reasoning an examining attorney will rely on in rejecting an application. In this post, I’m going to break down the nitty-gritty of how and why the USPTO can and does reject cannabis trademark applications.

Section 2(a) of the Trademark Act, 15 U.S.C. §1052(a), bars any trademark registration of immoral, deceptive or scandalous matter. Some characteristics of a mark that can result in rejection include references to sex, offense to religion or to honor, and references to illegality. Interpretation of this prohibition is both subjective and fluid, creating a good deal of uncertainty as to what actually constitutes “immoral or scandalous” matter. And there are many sources that claim this provision of the Trademark Act to be the basis for rejection of cannabis-related applications, which is typically not the case.

Most rejections of cannabis-related trademark applications are based not on the prohibition of “immoral or scandalous” matter, but on the failure of the application to make “legal use” of the mark in commerce. Here is a sampling of the language you might encounter in a rejection from your examining attorney:

In addition, applicant must submit a written statement indicating whether the goods and/or services identified in the application comply with the Controlled Substances Act (CSA), 21 U.S.C. §§801-971. See 37 C.F.R. §2.69; TMEP §907.

Breaking down this requirement, 37 C.F.R. §2.69 states as follows:

Compliance with other laws: When the sale or transportation of any product for which registration of a trademark is sought is regulated under an Act of Congress, the Patent and Trademark Office may make appropriate inquiry as to compliance with such Act for the sole purpose of determining lawfulness of the commerce recited in the application.

Note that this provision states that the examining attorney “may” make inquiry, and does not explicitly state that use in commerce must be “lawful.” That requirement comes from section 907 of the Trademark Manual of Examining Procedure (TMEP), which is meant only to provide “outlines” and “guidelines.” Here’s what the TMEP has to say: “Use of a mark in commerce must be lawful use to be the basis for federal registration of the mark.” Gray v. Daffy Dan’s Bargaintown, 823 F.2d 522, 3 USPQ2d 1306, 1308 (Fed. Cir. 1987).

In looking to the Gray case for language requiring legal use in commerce, there isn’t much to go on aside from a passing mention of “lawful use in commerce,” which was not the issue the Court addressed in its opinion. This lack of clear case and statutory law pertaining to the “legal use in commerce” requirement raises the issue of whether the requirement has been misconstrued, and may make some of these rejections ripe for challenge.

The takeaway here is that the inability to obtain a federal trademark registration for a mark used on cannabis is not as clear-cut as many assume. There is policy at play, and, particularly in this industry, policy is apt to change at any time.