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Schedule III and the Federal Registrability of Cannabis Trademarks

by | Jul 1, 2024 | Trademark, Cannabis | 0 comments

As it currently stands, trademark offices in states where cannabis has been legalized will register trademarks for cannabis products. However, the United States Patent and Trademark Office (“USPTO”) will not federally register brand names as trademarks because cannabis remains illegal under the Controlled Substance Act (“CSA”). Further, under the Food Drug and Cosmetic Act (“FDCA”), the addition of cannabinoids, whether derived from hemp or cannabis into ingestible products such as foods and beverages, is not permitted as such addition is considered an “adulteration.” Since December 20, 2018, federal trademark registrations are permitted for inhalable and cosmetic topical hemp products, as such products are not considered unlawful under the FDCA.

A recent announcement by the Drug Enforcement Administration (“DEA”) indicates that the agency will support the Health and Human Services (“HHS”), who earlier this year made a recommendation to reschedule cannabis on the schedule of controlled substances from Schedule I to Schedule III. HHS conducted a multi-factor assessment and made its final rescheduling recommendation based (primarily) on the basis that cannabis has been acknowledged to have an accepted medical use and that cannabis has a lower potential for abuse than drugs classified under Schedule I or II. There are still various stages of administrative actions that need to be taken before rescheduling is final, and there could be litigation to try and stop the schedule change. Recent headlines focused on the proposed rescheduling raises questions about whether this change could impact the federal registrability of trademarks for cannabis products.

So what does the potential schedule change mean relative to trademarks? We surmise not a lot, as under Schedule III, cannabis is still a drug and still highly controlled. Keep in mind that rescheduling is not the same as descheduling or legalization.

For Federal Registrability, Schedule III Drugs Will Require Clinical Trials

Looking at how products including Schedule III substances are viewed at the USPTO, they will grant registrations for Schedule III products, for example, products containing less than 90 milligrams of codeine per dosage unit (e.g., Tylenol with codeine), ketamine, anabolic steroids, and testosterone.

Nonetheless, the CSA contains extensive regulations and requirements for the manufacture and distribution of Schedule III products. The FDA still would need to approve how these products are manufactured and administered, which includes evidence of clinical trials. Meaning, a trademark applicant for a Schedule III product must take affirmative steps to seek governmental authorization to sell a product intended for human consumption.
With over 15 years of experience with the USPTO prosecuting cannabis-related trademarks, Evoke is well-aware that the USPTO looks for any reason to reject an application for a cannabis product. As such, it is possible that a USPTO examining attorney will request additional information from the applicant to clarify whether the products are, or will be, lawfully sold in the U.S., including whether they intend or are seeking FDA approval for the applied-for product. Without having conducted clinical trials, or an affirmative statement that the applicant will conduct clinical trials to get FDA approval, an application is likely to be refused registration.

Should a cannabis operator apply now and get into the queue?

Under U.S. trademark law, registration will only issue upon submitting evidence of lawful use in interstate commerce. However, the USPTO permits applicants to file based on a bona fide intent to use the mark in lawful commerce. But under legal precedent, In Re JOY TEA INC. , No. 22-1041 (Fed. Cir. 2022), an applicant for a federal trademark registration must have a bona fide intent to use its mark in commerce on goods that are currently lawful under federal law. A bona fide intent is not the mere the hope that such products may become lawful in the future or an intent to reserve a right in the mark.

As such, we do not think it is yet time to file applications for cannabis inhalables and topicals because such applications would be vulnerable to challenge based on lack of bona fide intent. As discussed above, hemp ingestibles are and would continue to be unlawful under the FDCA regardless of rescheduling.

What is the harm of not permitting federal registrations for cannabis products?

Despite the fact the there is an explosion of products and brands, and that cannabis and hemp products—ingestibles, topicals, and inhalables are readily available through a variety of marketing channels, the federal government is not offering the same consumer protection to cannabis and hemp consumers, which includes medical cannabis patients who have underlaying vulnerabilities.
Fundamentally, trademarks are intended as a tool for consumer protection. Branding for all other products allows consumers to distinguish between brands. Whether the product is mustard or cannabis, consumers use trademarks to recognize the product that they purchased before and want to purchase again. Trademarks are shorthand for consumers and simplify the purchasing process. Brand recognition can be even more important for cannabis products as consumers try different products and learn which products work for them based on the cannabinoid content and combination of cannabinoids in a given product.
In addition, without federal protection, brand owners face a myriad of barriers in enforcing their rights in a mark. Courts routinely refuse to grant cannabis trademark owners even the most basic of trademark rights, interfering with their duty to maintain exclusivity in a given mark.
In summary, rescheduling to Schedule III will not change much for current cannabis brand owners. And the status quo is simply not good enough for protecting consumers.

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