District court rejects cannabis brand’s “prior use” defense against trademark infringement where “marijuana remains illegal for all purposes under federal law.”
First in time rights under trademark law are serious business and a prior use defense is a method for asserting “first in time” as a way of saying – we used it before you did – to someone suing over trademark infringement.
As those following the blog know, “lawful” first use is how you establish a right, so if you’ve got a mark based on a regulated substance like alcohol, that requires a certificate of label approval to be shipped in interstate commerce, then you haven’t lawfully participated in interstate commerce qualifying for your trademark if you’ve not obtained that certificate of label approval from the TTB.
The same goes for controlled or illegal substances. The USPTO has for years now denied trademark registration for marijuana or cannabis related services and products under the rationale that the Controlled Substances Act renders such activity and products unlawful and therefore unregistrable.
In this case, Kiva Health Brands (KHB) makes non-cannabis/marijuana health brand products and sells them throughout the US and internationally. KHB received a federal trademark registration for KIVA for foods in 2014. Kiva Brands, Inc. (KBI), sells cannabis and marijuana related products, is a leading provider of cannabis-infused edible chocolates and confections, and has been making products since 2010 under the names KIVA and KIVA CONFECTIONS.
The health food company learned of the marijuana company in 2015 and after alleging that there was consumer confusion, sued for trademark infringement.
In the case, KBI raised a prior use defense arguing that it was using the name first and should be entitled to priority and the ability to defeat the claims KHB raises on those grounds.
This argument is fairly straight forward:
“[T]he illegality of KBI’s products under federal law renders [it] unable to challenge KHB’s federal trademark.”
And it happens to have the backing under trademark law in everything from circuit court opinions to the examiner’s manual:
For example, evidence indicating that the identified goods or services involve the sale or transportation of a controlled substance or drug paraphernalia in violation of the Controlled Substances Act (“CSA”), 21 U.S.C. §§801-971, would be a basis for issuing an inquiry or refusal. See In re JJ206, LLC, 120 USPQ2d at 1569-70; In re Brown, 119 USPQ2d at 1351-53. Subject to certain limited statutory exceptions, the CSA makes it unlawful to manufacture, distribute, or dispense a controlled substance; possess a Schedule I controlled substance; or sell, offer for sale, or use any facility of interstate commerce to transport drug paraphernalia. See 21 U.S.C. §§ 812(b)(1)(B), 841(a)(1), 844(a), 863. Note that, regardless of state law, marijuana, marijuana extracts, and the psychoactive component THC remain Schedule I controlled substances under federal law and are subject to the CSA’s prohibitions. 21 C.F.R. §1308.11; see U.S. Const. Art. VI. Cl. 2; Gonzales v. Raich, 545 U.S. 1, 27, 29 (2005); United States v. Oakland Cannabis Buyers’ Coop., 532 U.S. 483, 491 (2001); In re JJ206, LLC, 120 USPQ2d at 1571; In re Brown, 119 USPQ2d at 1352 . These prohibitions apply with equal force to the distribution and dispensing of medical marijuana. In re PharmaCann LLC , 123 USPQ2d at 1126 .
The court applied the law in this case and in rendering the decision, the Court noted that infused cannabis products are lawful in California, but illegal under federal law and further pointed out that this did not matter:
While KBI is only asserting California common law rights to the KIVA mark, … it is doing so as a defense to a federal trademark claim…. That defense relies on KBI’s prior use of the mark. See Sengoku Works, 96 F.3d at 1219 (“To acquire ownership of a trademark . . . the party claiming ownership must have been the first to actually use the mark in the sale of goods or services.”); CreAgri, 474 F.3d at 630 (“only lawful use in commerce can give rise to trademark priority”). KBI’s prior use was illegal under federal law. … (all KBI products contain cannabis); In re Morgan Brown, 119 U.S.P.Q. 2d  at *3 (“Regardless of individual state laws that may provide for legal activities involving marijuana, marijuana . . . remain[s a] Schedule I controlled substance under federal law . . . .”). KBI therefore did not make lawful prior use of the mark. See S. Cal. Darts Ass’n, 762 F.3d at 931. To hold that KBI’s prior use of the KIVA mark on a product that is illegal under federal law is a legitimate defense to KHB’s federal trademark would “put the government in the anomalous position of extending the benefits of trademark protection to a seller based upon actions the seller took in violation of that government’s own laws.” See CreAgri, 474 F.3d at 630 (internal quotation marks omitted).
A decent reminder that federal rights will require further legislation and action to allow the developing industry the ability to rest assured that its trademark and brand protections can expect the full effect of US trademark law and policy.