Keep your cannabis brand from going up in smoke

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Under Canada’s Trade-marks Act, a person is not entitled to use a trademark if that trademark contravenes a Canadian federal statute. The recently-enacted Bill C-45, an Act respecting cannabis and to amend the Controlled Drugs and Substances Act, the Criminal Code and other Acts (Cannabis Act) imposes significant restrictions and requirements on branding, promoting, packaging and labelling cannabis, cannabis accessories and services related to cannabis. Given that the right to use a trademark is intrinsically connected to branding, packaging, and labeling, the Cannabis Act will significantly affect the adoption and use certain trademarks in the cannabis industry.

I. Legislation

On April 13, 2017, the House of Commons introduced the Cannabis Act, which received Royal Assent on June 21, 2018, making Canada the second country in the world, after Uruguay, to fully legalize cannabis use.

The Cannabis Act aims to discourage youth cannabis use by prohibiting (among other things) products that are appealing to youth, packaging or labelling cannabis in a way that makes it appealing to youth, and promoting cannabis, except in narrow circumstances, where young persons cannot view the promotion.

The regulations to the Cannabis Act were published in the Canada Gazette, Part II, on July 11, 2018, and come into force on October 17, 2018. With respect to choosing a brand, sections 105-138 of the Cannabis Regulations (Regulations) are relevant, as they establish the framework for the packaging of cannabis products and set out strict requirements for packaging, including logos, colours, and branding. For example, the packaging requirements include restrictions on the appearance of the immediate container in which certain cannabis products are packaged, the location of any branding or imaging, the use of colour, the finish and texture of any cannabis container, the use of scents or sounds, and the covering of any packaging. Labelling requirements call for certain health warnings on all cannabis products (which must be rotated to ensure each warning is displayed an equal number of times), as well as the brand name, product lot numbers, class of cannabis, recommended storage conditions, packaging date and a warning with respect to keeping the products out of the reach of children.

Additionally, “brand element” is defined under the Cannabis Act as any brand name, trademark, trade name, distinguishing guise, logo, graphic arrangement, design or slogan that is associated with or evokes cannabis, or an accessory or service relating thereto, or a brand of any cannabis, accessory or service relating thereto.

Under the Regulations, a label may include only one brand element, other than a brand name. A brand element must be displayed only once on the principal display panel, or, if there are separate principal display panels for English and French, only once on each principal display panel. Further, any brand element included on a label is restricted in colour and size.

A brand element cannot be a colour that has the lustre of metal or has metallic properties (e.g., Pantone Metallics), and it cannot be fluorescent, have fluorescent properties, or have pigments that absorb ultraviolet energy and transmit it as a longer wavelength (e.g., Pantone 800 Series).

If the brand element is an image, the surface area must be equal to or smaller than the surface area of the required standardized cannabis symbol to be displayed on the packaging. If a brand element is solely text, the font size must be equal to or smaller than the font size used for the health-warning message. The covering, and interior and exterior surface of any container in which a cannabis product is packaged, must not display any brand element.

The Cannabis Act also limits packaging, unless otherwise authorized, that (i) could appeal to young persons; (ii) displays or communicates a testimonial or endorsement; (iii) depicts a person, character or animal, whether real or fictional; (iv) associates the cannabis or a brand element with, or evokes an emotion about or image of, a way of life (e.g., glamour, recreation, excitement, vitality, risk or daring); or (v) contains false, misleading or deceptive information about characteristics, such as potency, quality, safety, or health risks of the cannabis.

II. Choosing a cannabis trademark

Although trademarks have been registered in association with medical marijuana/cannabis for many years, the Canadian Intellectual Property Office (CIPO) will only register trademarks filed in association with recreational cannabis products after such sales are legal in Canada, which is expected as of October 17, 2018 (note that legalization of edible products will be delayed by at least 12 months).

CIPO is being flooded with applications to register trademarks in anticipation of recreational cannabis sales. However, since actual use is still a criterion for registration in Canada (note this will change with Canada joining the Madrid Protocol), many marks are pending with CIPO until actual sales occur.

Some general advice for adopting any trademark is as follows:

  • Select a coined word with no dictionary or colloquial meaning (or one that is phonetically similar to a word that would evoke any of the prohibitions noted in this article);
  • Avoid official symbols, coat of arms, badges, crests or emblems (e.g., the Canadian flag);
  • Avoid the name or surname of a person (e.g., John Smith);
  • Avoid words clearly descriptive of the goods or services in relation to which it is used (i.e., describe the character or quality of the goods and services of the company);
  • Avoid words that are deceptively mis-descriptive (i.e., inaccurately describe the goods and services of the company);
  • Avoid words or designs that are confusing with an existing trademark, or a pending trademark or trademark; and
  • Avoid using a word in another language that describes the goods or services (e.g., "maconha", the Portuguese term for "marijuana", with respect to a marijuana-related trademark, or “gelato”, the Italian word for ice cream, with respect to an ice cream-related trademark).

Additionally, there are further guidelines applicable when choosing a trademark for recreational cannabis. In accordance with the Cannabis Act and the Regulations as noted above, the best advice with respect to registration of a cannabis-related trademark is to:

  • Avoid the use of colours that have the lustre of metal or have metallic properties (e.g., Pantone Metallics);
  • Avoid the use of colours that are fluorescent, have fluorescent properties, or have pigments that absorb ultraviolet energy and transmit it as a longer wavelength (e.g. Pantone 800 Series);
  • Do not use images of people, characters and animals (whether real or fictional);
  • Avoid anything that may appeal to young persons or associate the use of cannabis with a glamorous, recreational, exciting, risky, or daring lifestyle; and
  • Avoid false, misleading or deceptive information or suggestions about characteristics, such as potency, quality, safety, or health risks of the cannabis.

Once a cannabis trademark has been selected for use, the requirements of the Cannabis Act and the Regulations, including packaging, labelling and promotional restrictions, must be strictly followed. Non-criminal breaches of the Cannabis Act include a penalty of not more than CA$1 million.

Applicants who have filed trademark applications for certain marks will have priority rights to use those trademarks. Thus, it is important to perform clearance searches prior to selecting and investing in a brand.

Given the changes to the Trade-mark Act, which are expected to be in force in Canada in the next year and will result in significant changes on filing strategies and claims available (see previous Dentons article – Upcoming changes to Canada’s trademark and anti-counterfeit laws), it is important to consult with a trademark agent prior to filing an application.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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