How Cannabis Brand Protection Can Help with China Brand Protection

Given our law firm’s strong cannabis practice, it is no surprise that our intellectual property and cannabis work overlaps quite a bit. While the fundamentals of IP law remain constant across industries, the cannabis space presents unique challenges for brand protection, due to ongoing prohibitionism in the United States at the federal level (with similar issues present in other jurisdictions as well).

For a trademark to obtain a U.S. federal registration, it must be lawfully used in commerce. Under the Controlled Substances Act (CSA), cannabis with THC levels exceeding 0.3% is considered marijuana, an unlawful drug. The USPTO position is that commerce involving marijuana thus cannot be lawful and refuses to register marks that identify marijuana or marijuana-derived products.

In addition, the FDA considers that many CBD products (including foods, beverages, dietary supplements, and medical products) violate the Federal Food, Drug, and Cosmetic Act (FDCA). As a result, the USPTO will not register marks that identify such CBD products.

One of the strategies used by cannabis brands in response to the USPTO stance has been to register their marks for goods that are not prohibited by federal law. In some cases this means cannabis goods that fall outside the prohibitions of the CSA and FDCA, but in others it means products that do not contain cannabis at all. Some of the more common examples of the latter are clothing and smokers’ articles such as lighters.

This approach is far from perfect. A cannabis brand has no protection against an out-of-state competitor that uses its name to sell cannabis products (it can however rely on state trademark registrations against in-state competitors). However, the cannabis brand can prevent that competitor for selling merch that bears its marks, such as logos and taglines. That alone can be a powerful disincentive for the competitor, who may conclude it would be better off developing its own brand, which it can fully commercialize.

In addition, it allows the cannabis business to enjoy at least some federal protection of its brand. While in principle the registered trademark symbol (®) just indicates the nature of the mark, it in itself can reflect well upon the brand. After all, it shows that the company behind it cares about the brand.

The approach to cannabis trademarking described above rests upon an understanding that brand protection is best understood as a continuum. Obviously, a brand that is able to register its most important trademarks for its core products will be in stronger position that one that does not. However, being unable to register those trademarks does not mean that a brand has to give up on protecting its intellectual property altogether, and cannabis brands are a prime example of this. Conversely, a brand with a strong trademark portfolio can still find ways to strengthen its IP protection. One of my favorite examples of a brand that goes above and beyond is McDonald’s registration of the yellow canopies that distinguish its restaurants.

What does this have to do with China?

Well, China is by far the country with the greatest number of trademark applications in the world. Between legitimate registrants and squatters, there is a good chance that companies applying for trademarks in China will find one or more of its desired marks have already been registered by someone else. Depending of the circumstances, there may be tools available to challenge those registrations. But taking a page from cannabis brands’ book can also be a good idea.

In similar fashion to what many cannabis businesses do, companies whose trademark has been registered in China can consider filing in other classes, to protect non-core products and/or deprive the owner of “their” trademark from further building upon their exploitation of their trademark. Brands can also consider other approaches, such as registering parts of their trademark, modifying logos, or adding trademarked features to their products.

Bottom Line: Obtaining trademark and IP protection requires creativity on the part of both cannabis brands and companies seeking such protection in China.