Will you be able to prevent your competitors from using your cannabis, CBD, THC, or hemp brand on their products? That depends on whether your brand is truly yours and whether you can enforce your trademark rights against those competitors.
The “green rush” is in full swing as more and more states legalize hemp, CBD, and medical or recreational marijuana use. Capitalizing on this emerging sector, a host of cannabis start-ups have brought a wide variety of products to market, such as edibles, oils, tinctures, vapes, rolling papers, and other smokers’ accessories.
The key to standing out in this highly competitive market can be summed up in one word: branding. Companies who develop, protect, and exploit their brands to distinguish themselves from the crowd will be well positioned to expand market share and get their products — rather than their competitors’ products — into the hands of customers.
Don’t Risk Time & Money Building a Cannabis Brand You Can’t Use
First things first: How can you develop, protect, and exploit your brand if you’re not certain whether a competitor is already using the same business name, brand name, slogan, or logo? The short answer is that you can’t. The solution to this problem is to conduct a trademark clearance search before naming your brand.
Trademark rights in the United States are based on first use in commerce, not first registration. Further complicating the issue is the fact that trademark rights are geographically specific, not to mention the fact that federal trademark registration of a cannabis-related brand is currently prohibited, so cannabis trademark owners are relegated to registering their brands state by state, as they expand their business into each state in which their business is legal.
There may not be a competitor using the same name as your cannabis start-up in your state right now, but trouble may come when your cannabis start-up expands into another state or a similarly-named competitor expands into your state.
When it comes to any particular business name, brand name, slogan, logo, or design, the entire cannabis industry is in a race to use it or lose it.
Businesses that skip conducting a trademark clearance search risk wasting valuable time building a brand that eventually may have to be abandoned because a competitor has superior rights to the name, not to mention the risk of exposing your business to a trademark infringement lawsuit.
Take, for example, the case of two cannabis retailers, one in Arizona and one in California, who are currently in a dispute over which company has superior rights to the name HARVEST. The Arizona-based HARVEST argues that it has superior rights to the name because it began using the mark in commerce in 2012. In response, the California-based HARVEST argues that its rights are superior within the State of California because it has been using the mark in commerce there since 2016, and the Arizona-based company has only recently expanded into California.
A trademark clearance search might have prompted one of these companies to invest in a different name and avoid the substantial legal fees and business uncertainty brought on by litigation.
This dispute also shows the importance of a comprehensive trademark clearance search, rather than a preliminary search of only identical marks on the federal registries, for example. A comprehensive trademark clearance search examines both federal and state trademark databases, online databases, trade directories, product catalogs, internet domain names, and the like.
Is Your Cannabis Trademark Name Too Close to a Competitor’s?
While the HARVEST case shows two businesses fighting over an identical name, the scope of the infringing brand problem is not so straightforward. The test of trademark infringement is whether the brands are confusingly similar to a pre-existing name used on similar or related goods or services.
A court will look at a variety of factors when considering whether two trademarks are confusingly similar, including:
- Relative strength or weakness of the two marks;
- Similarity of the marks in terms of
- Connotation, and
- General commercial impression;
- Similarity (or relatedness) of the goods or services;
- Conditions under which the products are sold;
- Degree of care consumers use in buying (e.g. impulse purchases versus high-dollar product investments);
- Similarity of the channels of trade and marketing/advertising;
- Actual marketplace confusion;
- Possibility or likelihood of product line expansion; and
- Defendant’s intent.
If these factors seem a bit subjective to you, that’s because they are. The courts do not always apply these factors in a predictable way, which only increases the importance of conducting an exhaustive clearance search in order to avoid as many potential obstacles as possible.
The best way to conduct a truly comprehensive trademark clearance search is to hire an attorney who has cannabis industry experience to conduct the search before you invest in a professional designer to develop your brand. Considering the costs of launching a new brand – and possibly having to re-launch later under a different brand – failing to put first things first can be costly. Conducting a trademark clearance search is a MUST for every cannabis start-up, regardless of your budget.