High on IP: Marijuana Related Intellectual Property Law

There is a distinct trend towards legalization of marijuana use in some form. The increasingly friendly legal environment for marijuana use has attracted significant business and investor interest in exploiting what promises to be a substantial revenue stream.

This raises the issue of what type of intellectual property can be used to protect such business interests. To a great extent, IP protection for such business is no different than for any other business. However, the indeterminate state of the legality of marijuana has affected intellectual property law in some unexpected ways.

There is a distinct trend towards legalization of marijuana use in some form. The increasingly friendly legal environment for marijuana use has attracted significant business and investor interest in exploiting what promises to be a substantial revenue stream.

In addition, electronic cigarettes, cigars and pipes (which can be used for both tobacco and marijuana) have become fashionable and popular. So much so that the Oxford English Dictionary named the verb “vape” as its Word of the Year.

This raises the issue of what type of intellectual property can be used to protect such business interests. To a great extent, IP protection for such business is no different than for any other business. However, the indeterminate state of the legality of marijuana has affected intellectual property law in some unexpected ways.

Legality Of Marijuana: Current State of the Law

Currently, two states (Washington and Colorado) permit recreational use of marijuana, and two more (Alaska and Oregon) passed ballot measures this past election that permit recreational use and are to take effect in 2015. The District of Columbia also passed such a measure, but that is subject to Congressional review.

Nineteen other states, including New York, have medical marijuana laws that permit much more limited use of marijuana; these laws vary as to what types of medical conditions qualify and how an affected person can obtain the drug.

Yet, under federal law, marijuana remains an illegal controlled substance, specifically, the Controlled Substance Act, 21 U.S.C. §§ 802(16), 812, 841(a)(1), 844(a). The Justice Department, however, has indicated that it will tolerate some state-level legalization of both recreational and medical marijuana, so long as that does not interfere with federal policies.

On August 29, 2013, the Justice Department issued a memo entitled “Guidance Regarding Marijuana Enforcement” in which it outlined several areas which are enforcement priorities for the federal government (such as preventing marijuana distribution to minors, preventing revenues from marijuana sales from supporting criminal enterprises, preventing diversion of marijuana to states where it is illegal, etc.)

These areas are to be the focus of federal prosecution. So long as state medical and recreational distribution systems are consistent with these goals, the Justice Department will refrain from federal prosecution of low-level use under state laws.

Trademark Law

It is basic trademark law that rights thereunder are based on use in commerce. To obtain a federal registration, a party must show use of the mark with respect to the goods in “Commerce,” defined as any commercial activities within Congress’ ability to regulate.

Such commerce must also be legal; a registration cannot be based upon a use which is unlawful under federal law. See United Phosphorus, Ltd. v. Midland Fumigant, Inc., 205 F.3d 1219, 1225 (10th Cir. 2000); CreAgri, Inc. v. USANA Health Sciences, Inc., 474 F.3d 626, 630 (9th Cir. 2007); In re Midwest Tennis & Track Co., 29 U.S.P.Q.2d 1386, n. 2 (TTAB 1993) (“It is settled that the Trademark Act's requirement of ‘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.”)

The Trademark Office has accordingly taken the position that, since commerce in marijuana remains illegal under the Controlled Substances Act, it will not issue registrations for marijuana or related substances. In fact, its standard rejection also indicates that drug paraphernalia (equipment “primarily intended” for use in manufacturing or using controlled substances) is itself illegal and hence cannot be listed among the goods in a trademark registration.

This does not mean, however, that all marijuana related registrations will be rejected. There are quite a few issued registrations that relate to marijuana education or medical advice, related publications or websites, and even a registration (for the mark MELLOW PAGES) for an on-line compilation of contacts of marijuana dispensaries, stores, doctors, lawyers and other professionals related to marijuana use.

There are also registrations for organizing marijuana-related events, for T-shirts, and other promotional items.

In the area of marijuana-related paraphernalia, at first glance there appear only a few trademark applications (and no registrations) for such products. However, these products enjoy the advantage of also being useful for other substances, like tobacco and herbs, that are completely legal.

Thus there are numerous applications (and a few registrations) for such products as “electronic cigarettes; electronic cigars; electronic hookahs; electronic smoking pipes; mechanical electronic cigarettes; smokeless cigarette vaporizer pipes” and similar products. Such products have recently become popular in their own right for tobacco use, which may account for some of the recent increase in filings.

But these product descriptions likely also are being used (and will be used) by companies seeking to service the growing market for recreational marijuana use.

On the other hand, the Trademark Office does at times investigate an applicant, usually through its website, to determine whether use is legal, and may reject an application where illegal marijuana activities are involved. Several years ago, an applicant applied for the mark THE CANNY BUS and Design for a marijuana delivery service. The description of services simply read: “[d]elivery service, namely, delivery of goods.”

But the Trademark Office researched both the applicant’s website and a Wall Street Journal article about his business, and then rejected the application as concerning illegal services under the CSA.

Notwithstanding that the Trademark Office refuses to register trademarks of a party selling marijuana products, the party still has common law rights, assuming such would be enforced in states where sales are legal (either for recreational or medical use). It may also wish to consider state trademark registrations.

Although ordinarily state trademark registrations are considered to be of limited value, given that marijuana (particularly recreational) is only legal in a few states, such more localized registrations might have some value.

Patents

In sharp contrast to the Trademark Office, the Patent Office is far more liberal in permitting patents for marijuana-related inventions. There are numerous issued utility patents directed to methods of medical use of marijuana, and technology for use of marijuana for both recreational and medical uses.

There are also utility patents for electronic cigars, cigarettes and assorted vaporizers, which, again, have become both popular in their own right and can be used with marijuana where legal.

Thus issued patents in this area include:

  • US 6,630,507 B1 – [Methods of using] Cannabinoids as antioxidants and neuroprotectants
  • US 8,337,908 B2 – Plant extract from low-THC Cannabis for the treatment of disease
  • US 8,753,696 B1 – Methods for preparing cannabis and related products
  • US 6,328,992 B1 – A Cannabinoid Patch and Method for Cannabis Transdermal Delivery
  • US 8,490,629 B1 – Therapeutic Smoking Device (such as for medical marijuana or herbal remedies)

Published applications have included

  • Dual-Chamber Packaging Systems for Cannabis Infused Products
  • A Method and System for Communication, Advertisement, Commerce, Marketplace, Customer Relationship Management, Content Management, Internet Accounting and Verification of Information Pertaining to Legal Marijuana Over a Network
  • Process for Extraction of [Cannabis-related extracts] and Preparation of Specific Strength Marijuana Cigarettes
  • Marked Cannabis for Indicating Medical Marijuana

Some of these applications are still pending; others have been denied, but the denials had nothing to do with the fact that the applications involved cannabis, but instead were based on traditional patent examinations grounds, e.g., anticipation, obviousness, indefiniteness, etc.

Apart from utility patents, the Patent Office has issued several design patents for the ornamental appearance of various paraphernalia, such as electronic pipes and cigarettes.

One area that may be of special interest to the industry is plant patents. The Patent Act allows the grant of a patent to “[w]hoever invents or discovers and asexually reproduces any distinct and new variety of plant, including cultivated sports, mutants, hybrids, and newly found seedlings . . .” 35 U.S.C. § 161.

The patent lasts for 20 years from the date of filing the application, and protects the inventor's right to exclude others from asexually reproducing, selling, or using the plant so reproduced.

There are currently pending several recently-filed applications for varieties of marijuana; the varieties purportedly have superior qualities (mainly differing levels of Cannabidiol (CBD) and Tetrahydrocannabinol (THC)), that are useful for medicinal or recreational use. (See, for example, the following published applications: US20140245494 A1; US20140259228 A1; US20140245495 A1)

It should be noted that names of varieties or cultivars of particular plant species have been held not registrable as trademarks. The Federal Circuit, in In re Pennington Seed Co., 466 F.3d 1053 (Fed. Cir. 2006) upheld the Trademark Office’s long-standing practice of refusing to register varietal names because such names are generic – they identify the particular variety of plant, not the source that produced it.

Thus parties seeking to patent plant varieties (whether marijuana or otherwise) are well advised to select different names for the variety and for the source.

Other Intellectual Property

Other forms of intellectual property have also become relevant to the increasingly legal marijuana industry.

It was recently reported that the family of Bob Marley licensed his name and likeness to be used for a brand of marijuana, to be named Marley Natural.

It was also recently reported that two veterinarians based in Washington State brought suit alleging theft of trade secrets in formulation for cannabis-based medicines for pets. Other permutations of intellectual property claims can be expected in the future.

Enforceability Of Rights Remains An Unanswered Question

One open question is whether courts will be willing to enforce intellectual property rights (either statutory or common law) where the underlying business is of unclear legality. It is established in both contract and tort law that courts will not aid in enforcement of illegal rights.

This is sometimes expressed by the Latin legal maxim ex turpi causa non oritur actio (“from a dishonorable cause an action does not arise”), which basically means that a plaintiff will be unable to pursue a legal remedy if it arises in connection with his own illegal act.

The New York Court of Appeals in Barker v. Kallash, 63 N.Y.2d 19 (1984), a negligence case involving personal injury, expressed the principle thus:

[W]hen the plaintiff has engaged in activities prohibited, as opposed to merely regulated, by law, the courts will not entertain the suit if the plaintiff’s conduct constituted a serious violation of the law and the injuries for which he seeks recovery were the direct result of that violation. In this latter instance recovery is denied, not because the plaintiff contributed to his injury, but because the public policy of this State generally denies judicial relief to those injured in the course of committing a serious criminal act.

Id. at 24.

Thus, there the plaintiff, who was injured while constructing a pipe bomb, was barred from suing someone who allegedly provided him with firecrackers from which gunpowder was extracted and use to make the pipe bomb. See id. Construction of a pipe bomb was a serious criminal offense under the New York penal code, and hence recovery was held barred. Id. at 26-28.

Would a court enforce a patent, trade secret or trademark right based upon marijuana use where such is only legal in a few states? Suppose, for example, that the owner of the CANNY BUS mark, alluded to above, brought suit against a competitor based upon his common law rights. Would a California state court enforce those rights?

What about a federal court (for example, he also brought suit under Section 43(a) of the Trademark Act, that protects unregistered marks)? Would courts in different states come to different results based upon the legality of use in their own state?

Does choice of law matter? For example, it was reported that the investment company which licensed Bob Marley’s name for a brand of marijuana, while based in Washington State, would base the company offering “Marley Natural” brand cannabis in New York. (The website, www.marleynatural.com, lists several open managerial positions, all in New York City.)

Would a dispute over the licensing of Bob Marley’s name be governed by New York or Washington law? Would the legality of recreational marijuana in each jurisdiction make a difference? Would it matter if the case were litigated in New York or Washington?

All of these interesting permutations still remain to be answered when marijuana-based intellectual property rights are litigated.


A previous version of the article appeared in the New York Law Journal, January 12, 2015