Trademark Board Harshes the Mellow of CBD Oil Manufacturer

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The relationship between the cannabis industry and intellectual property laws in the United States is unique and complicated, in many ways mirroring the nation’s collective views on the cannabis plant. This is unfortunate, in part because the law abhors uncertainty and, in part, because cannabis companies are currently undergoing a renaissance, which has fostered an explosion of novel and creative concepts that the intellectual property laws of this county were designed to protect.

A recent decision shows, however, that despite changes in cannabis laws in many states and the growing cannabis industry throughout the country, obtaining a federal trademark for hemp derived products remains an uphill battle. On June 16, 2020, in In re Stanley Brothers Social Enterprises, LLC, the federal Trademark Trial and Appeal Board (TTAB) affirmed the refusal to register a trademark in connection with “hemp oil extracts sold as an integral component of dietary and nutritional supplements” on the grounds that hemp oil extracts be marketed and sold as “dietary supplements” were per se illegal under the Food, Drug & Cosmetics Act (FDCA).

In order for a trademark to qualify for federal registration, the mark must lawfully be used in commerce. When a trademark application is reviewed by the USPTO, however, the mark’s use will be presumed lawful unless the application record indicates a violation of federal law. The USPTO will evaluate whether the goods or services associated with a mark are per se illegal.

Stanley Brothers Social Enterprises, LLC is a Colorado marijuana grower that produces various cannabis derivative products. One of those products is an oil extracted from the cannabis plant that is high in cannabidiol (CBD) content and low in tetrahydrocannabinol (THC). Stanley Brothers sought registration of the “CW” mark for its CBD oil, which was marketed as a dietary supplement that can be used “to promote mind and body wellness.” The examining attorney refused registration on the grounds that the mark’s use in commerce was illegal because the goods are illegal under the FDCA and the Controlled Substance Act (CSA).

On appeal, the TTAB did not address the legality of the CBD oil products under the CSA. Rather, the board held that the CBD oil products were per se illegal under the FDCA and thus ineligible for trademark registration. In refusing registration, the TTAB focused on a provision of the FDCA that bans “any foods to which has been added . . . a drug or biological product which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public.”

The TTAB was unpersuaded by Stanley Brother’s argument that their dietary supplements are not food under the FDCA and ruled that FDCA definition of foods includes certain products marketed as “dietary supplements” and affirmed the examining attorney’s contention that “hemp oil extracts,” such as CBD oil, are food to which CBD has been added. Specifically, because Stanley Brothers identified their “CW” CBD oil products as “an integral component of dietary and nutritional supplements,” the products are deemed to be food under the FDCA. The TTAB also rejected Stanley Brother’s argument that the 2014 Farm Bill’s Industrial Hemp Provision exempted it from the FDCA provision regarding food. The TTAB reasoned that the Industrial Hemp Provision permits authorized entities to “grow or cultivate industrial hemp,” but did not permit “the distribution or sale of CBD in food when CBD is the subject of clinical investigation, even if the CBD is derived from industrial hemp which falls outside the CSA.” Stanley Brothers also argued that their product was in the market prior to the institution of any substantial clinical investigation; however, the TTAB found that this argument was unsupported by the evidence.

The ruling in In re Stanley is not an absolute bar on trademarks for CBD products, in fact, numerous trademark registrations for various CBD products, such as essential oils, have been issued. Nevertheless, companies in the hemp and cannabis industry will need to consider their trademark strategy and product marketing carefully. While, for now, at least, the USPTO has made it clear that trademarks for CBD products used in food and dietary supplements are illegal under the FDCA and not eligible for registration, companies may still be able to acquire trademark protections for related or ancillary non-food CBD products.

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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