California's Bill To Add Marijuana Trademark And Service Mark Classifications

On December 12, 2016, Assembly Bill No. 64 (AB 64) was introduced to California's legislature, with the stated purpose of (1) furthering the intent of the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), a voter-enacted initiative legalizing recreational use and commercial sale of marijuana, and (2) reconciling that law with earlier laws addressing medical marijuana, dating back to the passage of the California Compassionate Use Act in 1996, when California became the first state in the nation to allow the use of medical cannabis.

Since then, 29 states have legalized medical marijuana, and 8 states and the District of Columbia have legalized marijuana for recreational use. Although AB 64 contains several other noteworthy (and politically palatable) provisions, the most talked-about feature of the new bill is the proposed creation of two new classifications for the registration of trademarks and service marks after January 1, 2018: Class 500 for medical and nonmedical cannabis or related products and Class 501 for medical and nonmedical cannabis-related services. Although conventional wisdom dictates these proposed classifications will enable marijuana businesses to better protect their intellectual property, the legal necessity and potential effect, including on currently existing alternatives, deserves a deeper exploration.

California/USPTO Aligned Against Legality of Marijuana Goods and Services Because federal trademark law does not necessarily preempt state trademark law, all 50 states have enacted some form of state-based trademark registration and enforcement system. In line with all other states, California's Model State Trademark Law provides for the registration of trademarks and service marks with the Secretary of State. However, unlike other states, California's trademark law has a stated intent "to provide a system of state trademark registration and protection substantially consistent with the federal system of trademark registration and protection under the Trademark Act of 1946 (15 U.S.C. Sec. 1051, et seq.), as amended." California Business and Professions Code (BPC) §14272. In addition (like most other states), California's state trademark law also provides that: "The classification of goods and services shall conform to the classifications adopted by the United States Patent and Trademark Office." California BPC §14235. Read together, these two provisions dictate that trademarks that could not be registered with the USPTO cannot be registered in California either.

For a three-month period beginning in April 2010,the USPTO had given medical marijuana−related trademark holders hope of securing federal registration of their marks by temporarily including new descriptions in the USPTO's Acceptable Identification of Goods and Services Manual, including "processed plant matter for medicinal purposes, namely medical marijuana," and "consumable products infused with medical marijuana, namely [insert type of substance/product description]." See Justin Scheck, "Patent Office Raises High Hopes, Then Snuffs Them Out," Wall Street Journal, July 19, 2010; SN 85079814, Correspondence dated September 27, 2010 (explaining retraction and offering a refund for application made under retracted identifications).

Aside from this hiccup, the USPTO's stated policy has always been and continues to be to refuse all trademark applications for marijuana-based goods and services as illegal under the Controlled Substances Act (CSA), which prohibits, among other things, manufacturing, distributing, dispensing or possessing certain controlled substances, including marijuana and marijuana-based preparations, and makes it unlawful to sell drug paraphernalia. 21 U.S.C. §§812, 841(a)(1), 844(a), 863. The USPTO's rationale is that valid trademark use, which requires a lawful use in commerce, cannot subsist in illegal activity.

For example, in a federal trademark application for the mark "Z WEED" (SN 86893120), the applicant described its goods strictly in terminology accepted by the USPTO: "Herbs for medicinal purposes; Medicinal herbal extracts for medical purposes; Medicinal herbal preparations; Medicinal herbs; Medicinal herbs in dried or preserved form; Plant extracts for medical, veterinary and pharmaceutical purposes; Plant extracts for pharmaceutical purposes; Psychotropics." Nevertheless, in an ensuing office action, the examining attorney rejected registration of the mark, finding "the applied-for mark is not in lawful use in commerce" because the specimen included a depiction of a marijuana leaf, and because "the wording contained in the applied-for mark, namely, 'WEED,' plainly indicates that applicant's identified goods include items that are prohibited by the CSA ..."

Even without a damning specimen of use, intent-to-use applications have fared no better before the USPTO. For example, in rejecting the mark "GOOD WEED" (SN 86698504) for "herbs for medicinal purposes," the examining attorney found (in addition to a descriptiveness refusal) that "the wording contained in the applied-for mark plainly indicates that applicant's identified goods ... are prohibited by the CSA," and...