Originally Published: Texas Tech Law

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Introduction[i]

The prohibition on immoral trademarks has been steadily eroding as a result of First Amendment litigation at the United States Supreme Court. In light of recent Supreme Court decisions on trademark registrations and free speech, the question then becomes: Is the Lanham Act’s ban on cannabis trademark registrations justifiable in light of the First Amendment in view of these recent cases?

I. Recent Statutory and Regulatory Changes to Cannabis Status

Although many states have legalized cannabis in various forms, cannabis consumption and production is still illegal under federal law, known as the Controlled Substances Act (CSA).[ii] This conflict of federal and state law was largely settled by the Supreme Court’s decision in Gonzales v. Raich.[iii] In Raich, the Supreme Court upheld the principle of federal supremacy and affirmed the federal government’s right to regulate controlled substances upon Commerce Clause grounds.

However, the Ninth Circuit Court of Appeals ruled, in United States v. McIntosh,[iv] that if the parties are in compliance with the state laws on medical marijuana, then they cannot be prosecuted for violations of the CSA. [v] This is because of the language of the Continuing Appropriation Acts limiting funding to the Dept. of Justice. [vi] This decision has no effect on the CSA itself, nor does it have any effect on state laws regarding recreational cannabis.

A. Agriculture Improvement Act of 2018

The Agriculture Improvement Act of 2018 changes the way that the government treats agricultural products from the cannabis plant. Both the THC-containing plant and the industrial hemp plant are the same plant.   The main difference between hemp and marijuana are in the THC content of the flowers produced by the plant. Hemp is low-THC and utilized for its industrial and food purposes, e.g. paper and hemp seeds. Marijuana is comparatively high-THC and is bred for the flowers or “buds.”

However, different breeds of the plant have differing concentrations of THC, CBD, and other medicinal chemical compounds, which are typically referred to as cannabinoids generally. The Agriculture Improvement Act of 2018 specifies that the hemp it legalizes is where the concentration of THC is less than 0.3% by dry weight. [vii]

Notably, the definition of hemp does not contain any reference to CBD nor does it provide guidance on what can be done with the legal hemp and any concentrated chemicals derived therefrom. It is possible that one could isolate or concentrate the THC from the low THC cannabis and ultimately end up with an end-product with a very-high concentration of THC, but the act gives no specific guidance on this. However, the resulting chemical compound would likely violate the CSA.

B. Food and Drug Administration View of THC & CBD

The Food and Drug Administration (FDA) classifies THC and CBD as drugs, and not as dietary supplements, and the FDA will regulate CBD- and THC-based products through its drug approval process.[viii] For example Epidiolex is a drug approved by the FDA for use in treatment of seizures, in which CBD is the active ingredient and Marinol (Dronabinol) is a THC-based drug that is prescribed for patients that have extreme nausea from diseases such as cancer and AIDS and for patients with anorexia.

The proliferation of CBD-based products around the country make it appear to consumers as though they are legal dietary supplements, but in reality these products are in violation of several federal laws, even after the passage of the Agriculture Act.

II. United States Federal Trademark Law as Applied to Cannabis Marks

While trademarks for cannabis products are prohibited, a mark related to cannabis is not necessarily excluded from USPTO trademark registration. Trademarks for cannabis-related marks may not be prohibited, but trademarks that are found to be “immoral” have been rejected by the USPTO.

A. “Immoral” Trademark Ban

The Lanham Act states that registration will be denied if the mark in question “Consists of or comprises immoral, deceptive, or scandalous matter.”[ix]

Generally, the USPTO presumes that an applicant’s use of a mark in commerce is lawful under federal law. Thus, registration generally will not be refused based on unlawful use in commerce unless either (1) a violation of federal law is indicated by the application record . . . or (2) when the applicant’s application-relevant activities involve a per se violation of a federal law. . . .

[I]t would be anomalous for the Patent and Trademark Office to accord recognition to the use of a mark when the use relied upon was unlawful. To cite an extreme example, it would be unthinkable to register a mark for use on heroin.[x]

In view of this, the issue of cannabis marks looks clear: the USPTO will not grant these marks. Cannabis remains a schedule I controlled substance under the CSA. Therefore, the USPTO will not register a trademark that would provide protection for illegal drugs.

However, in light of recent Supreme Court litigation, that may no longer be the case. The USPTO’s making a determination of “immoral, deceptive, or scandalous matter” often means taking a viewpoint, which violates the principle of viewpoint neutrality, in violation of the First Amendment.

B. Hemp Trademarks

Since the passage of the Agriculture Improvement Act of 2018, the USPTO issued guidance on trademarks relating to hemp. In the guidance, the Office reiterated its position on trademarks relating to illegal substances: “The United States Patent and Trademark Office (USPTO) refuses to register marks for goods and/or services that show a clear violation of federal law, regardless of the legality of the activities under state law.” [xi]

However, “For applications filed on or after December 20, 2018 that identify goods encompassing cannabis or CBD, the 2018 Farm Bill potentially removes the CSA as a ground for refusal of registration, but only if the goods are derived from ‘hemp.’”[xii]

IV. Recent Trademark Decisions at the Supreme Court and the Trademark Trial and Appeal Board

The Tam and Brunetti decisions from the United States Supreme Court regarding trademarks call into question the validity of the banning of trademark registrations under the Lanham Act. These cases have involved the intersection of Free Speech under the First Amendment to the United States Constitution and the ban on “immoral” trademarks registration. The bar to registration is largely untenable on First Amendment grounds as not viewpoint neutral.

A. In re PharmaCann

Decided just two days before the Supreme Court’s decision in Matal v. Tam, the USPTO issued its decision in In re PharmaCann on June 16, 2017.[xiii] This decision was about whether cannabis trademarks could be registered in the aftermath of the McIntosh decision.

PharmaCann was decided after McIntosh, but the Trademark Trial and Appeal Board (TTAB) at the USPTO found that cannabis products still comprise a violation of the CSA and are thus ineligible for trademark registration. In its decision, the TTAB said:

[F]or a mark to be eligible for federal registration, any goods or services for which the mark is used must not be illegal under federal law.  . . the identified goods or services with which the mark is intended to be used are illegal under federal law, the applicant cannot use its mark in lawful commerce, and it is a legal impossibility for the applicant to have the requisite bona fide intent to use the mark.

If the mark in question is one attached to a product or service that is used or can be used in commerce, registration should be permitted.

[R]egistration generally will not be refused based on unlawful use in commerce unless either (1) a violation of federal law is indicated by the application or other evidence . . . or (2) when the applicant’s application-related activities involve a per se violation of a federal law. These appeals involve claimed per se violations of the CSA based upon the final amended identifications of services in the applications, retail store services featuring medical marijuana and dispensing of pharmaceuticals featuring medical marijuana.[xiv]

The USPTO’s rejection of the mark is due to the per se violation of the CSA. In the TTAB’s continued examination of the rejection of the mark on appeal, it specifies that:

The Examining Attorney’s position on appeal is straightforward and may be summarized as follows: The CSA prohibits, among other things, manufacturing, distributing, or dispensing controlled substances.  Marijuana is a Schedule I controlled substance under the CSA.  As a result, [t]he dissemination, distribution and delivery of marijuana is prohibited under all circumstances pursuant to the CSA. The applicant’s services consist of retail store services that feature the sale and distribution of medical marijuana and dispensing of pharmaceuticals featuring medical marijuana. These activities constitute a per se violation of the [CSA].[xv]

In short, so long as cannabis remains a Schedule I controlled substance, it is considered illegal under federal law and so NO marks for cannabis itself will be granted protection from the USPTO.

B. Matal v. Tam

Matal v. Tam, was an appeal from a TTAB decision rejecting the mark for “The Slants,” a band name that was a play upon the racial epithet for Asians. The Supreme Court determined that:

The Lanham Act contains provisions that bar certain trademarks from the principal register. . . .

At issue in this case is one such provision, which we will call “the disparagement clause.” This provision prohibits the registration of a trademark “which may disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute.” §1052(a). This clause appeared in the original Lanham Act and has remained the same to this day. [xvi]

In the analysis, the court found that “Trademarks are private, not government, speech.”[xvii] The First Amendment protections are limitations on the government’s ability to regulate private speech. The rejection or registration of a mark is not giving the imprimatur to any given trademark, and the overbroad nature of the disparagement clause causes the USPTO to reject too many trademarks. That the speech is commercial when dealing with trademarks is immaterial to its analysis.

C. Iancu v. Brunetti

A year later, on June 24, 2019, the Supreme Court issued its decision in Iancu v. Brunetti.[xviii] This case dealt with the issue of registration of trademarks for an ostensible swear word, which would not receive registration under the Lanham Act, as it is scandalous and immoral. The mark in question was for the word “FUCT.” In this case FUCT is an acronym for “Friends U Can’t Trust,” but would be pronounced like the swear word, “Fucked.” Given the risqué nature of the latter word, the USPTO denied registration.

Justice Kagan wrote the decision for the court, and found that the ban on registration cannot be upheld in light of the doctrine of viewpoint neutrality. When the USPTO takes a stand on which viewpoints are permissible and which are not, the First Amendment is implicated.

The Court’s analysis does—in part—touch upon the issue of cannabis:

The PTO rejected marks conveying approval of drug use (YOU CAN’T SPELL HEALTHCARE WITHOUT THC for pain-relief medication, MARIJUANA COLA and KO KANE for beverages) because it is scandalous to “inappropriately glamoriz[e] drug abuse.” . . . But at the same time, the PTO registered marks with such sayings as D.A.R.E. TO RESIST DRUGS AND VIOLENCE and SAY NO TO DRUGS—REALITY IS THE BEST TRIP IN LIFE. . . . Similarly, the PTO disapproved registration for the mark BONG HITS 4 JESUS because it “suggests that people should engage in an illegal activity [in connection with] worship” and because “Christians would be morally outraged by a statement that connects Jesus Christ with illegal drug use.”[xix]

In making a distinction between those advocating one side of an issue without allowing for registration for those on the other side of said issue is viewpoint discrimination or—at the very least—not viewpoint neutrality.

And the PTO refused to register trademarks associating religious references with products (AGNUS DEI for safes and MADONNA for wine) because they would be “offensive to most individuals of the Christian faith” and “shocking to the sense of propriety.” . . . But once again, the PTO approved marks—PRAISE THE LORD for a game and JESUS DIED FOR YOU on clothing—whose message suggested religious faith rather than blasphemy or irreverence. . . Finally, the PTO rejected marks reflecting support for al-Qaeda (BABY AL QAEDA and AL-QAEDA on t-shirts) “because the bombing of civilians and other terrorist acts are shocking to the sense of decency and call out for condemnation.”[xx]

Offensiveness should not be a determining factor when determining what should and should not be permitted as it fails this neutrality test.

Yet it approved registration of a mark with the words WAR ON TERROR MEMORIAL. . . Of course, all these decisions are understandable. The rejected marks express opinions that are, at the least, offensive to many Americans. But as the Court made clear in Tam, a law disfavoring “ideas that offend” discriminates based on viewpoint, in violation of the First Amendment.

How, then, can the Government claim that the “immoral or scandalous” bar is viewpoint-neutral?[xxi]

The Court found that the lack of viewpoint neutrality was key to its First Amendment analysis. The “Al Qaeda” and “War on Terror Memorial” examples above are illustrative, i.e., one is reprehensible (Al Qaeda) and one is not (the Memorial), but both are examples of speech. Both examples of speech are protected by the First Amendment.

The USPTO violated the First Amendment rights of those applying for registration by taking a view that some views were permissible and others not permissible. The “immoral or scandalous” bar fails the test and thus cannot be upheld. The question then becomes: How does this affect the registration of trademarks relating to cannabis or other substances banned under the CSA?

The Court does NOT specifically address the issue of whether illegal marks can be prohibited in its majority decision. The question of whether trademarks for substances that are still banned under the CSA is an open question.

D. Cannabis Trademarks in Light of Brunetti and Tam

Brunetti and Tam expand the availability of federal trademark protection widely. The morality issue has been effectively determined to be in violation of the First Amendment. The question is: Can trademarks aimed to products or services that are in violation of federal law be registered? Or: Does the ban on cannabis marks stand in light of Brunetti and Tam?

1.   “Immoral or Scandalous”

Taken on face, Brunetti looks like it should lead directly to the legalization of cannabis-related trademark registration, but the partial concurrence/partial dissent of Chief Justice Roberts leaves some room to carve out the terms “immoral” and “scandalous” as separate:

[T]he “scandalous” portion of the provision is susceptible of such a narrowing construction. Standing alone, the term “scandalous” need not be understood to reach marks that offend because of the ideas they convey; it can be read more narrowly to bar only marks that offend because of their mode of expression—marks that are obscene, vulgar, or profane. That is how the PTO now understands the term, in light of our decision in Matal v. Tam. [xxii]

When dealing with marks that may implicate the First Amendment, this suggests that the court may make a distinction based upon the offensiveness of the language, which is different from the mode of expression. Chief Justice Roberts continues:

I also agree that, regardless of how exactly the trademark registration system is best conceived under our precedents—a question we left open in Tam—refusing registration to obscene, vulgar, or profane marks does not offend the First Amendment. Whether such marks can be registered does not affect the extent to which their owners may use them in commerce to identify goods. No speech is being restricted; no one is being punished. The owners of such marks are merely denied certain additional benefits associated with federal trademark registration.[xxiii]

The issue of whether the imprimatur of registration equates to approval is one that has been asked in other areas as well. For example, the state or federal governments licensing of professionals does not necessarily equate to creating state actors out of all licensed professionals.

A physician receives his/her license from the state department of education and a lawyer his/her admission to practice from the state courts, but an incompetent doctor or lawyer does not a civil rights violation make. While the government has an interest in only licensing competent professionals, the government is not issuing “seals of approval.”

Justice Roberts’ concurrence/dissent is correct insofar as no one is being denied speech—that is, one can still do business and speak freely without a registered trademark—but it is denying a property right to those seeking to protect their businesses. This property right is itself however inextricably linked to Free Speech rights.

However, a reading of the majority opinion may lead to a different conclusion than this, namely that the USPTO picking and choosing which marks to which it will grant registration is at issue.

2.   Application of Viewpoint Neutrality to Cannabis Registrations

Should the USPTO be granting or denying all marks relating to certain words or industries, it could be viewed as viewpoint neutral. In choosing between different sides of an issue, it fails the viewpoint neutrality test. Justice Alito’s opinion in Tam makes this clear.

The Brunetti decision does open up the doors to many more registrations at the USPTO, but it appears that the Court may be allowing a carve-out permitting the USPTO to forbid those “additional benefits associated with federal trademark registration.”[xxiv] One such carve-out could well be that of substances that are illegal under the Controlled Substances Act.

The question comes down to this: Is the anti-cannabis stance of the USPTO a violation of viewpoint neutrality? I believe that the USPTO’s stance on cannabis trademarks is untenable in light of Tam and Brunetti.

Conclusion

The continued ban on cannabis-related trademarks cannot stand in view of the recent Supreme Court decisions on “immoral” trademarks. The First Amendment issues inherent in these decisions logically extend to those of cannabis trademarks.

 

Sources

* Co-Founder and Member of the Committee on Cannabis Law, New York State Bar Association; Visiting Assistant Professor, State University of New York at Farmingdale State College; and Major and Staff Judge Advocate to Headquarters, New York Guard. Opinions are author’s own and not reflective of any of said organizations.

[i] This article is adapted from: Robert L. Greenberg “Cannabis Trademarks and the First Amendment” 52 Tex. Tech L. Rev _ (2020) available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3485100

[ii] Controlled Substances Act, 21 U.S.C. § 801, et seq.

[iii] Gonzales v. Raich. 545 U.S. 1, 125 S. Ct. 2195, 162 L. Ed. 2d 1 (2005)

[iv] United States v. McIntosh, 833 F.3d 1163 (9th Cir. 2016)

[v] For more analysis of the Controlled Substances Act and United States v. McIntosh, see, Robert L. Greenberg, Medical Marijuana Post-McIntosh, 20 CUNY L. Rev. F. 46 (2016), available at: https://academicworks.cuny.edu/clr/vol20/iss1/12 permalink: https://perma.cc/JY3C-87P6, on which this section is partly based.

[vi] Consolidated Appropriations Act, 2018, 115 P.L. 141, 132 Stat. 348, § 538 (2018)

[vii] Agriculture Improvement Act of 2018, 115 H.R. 2, 2018 H.R. 2 at § 297A.

[viii] Scott Gottlieb, “Statement from FDA Commissioner Scott Gottlieb, M.D., on signing of the Agriculture Improvement Act and the agency’s regulation of products containing cannabis and cannabis-derived compounds” Food & Drug Admin. (Dec 20, 2018) available at: https://www.fda.gov/news-events/press-announcements/statement-fda-commissioner-scott-gottlieb-md-signing-agriculture-improvement-act-and-agencys permalink: https://perma.cc/2XZG-3TRN

[ix] 15 USC § 1052(a)

[x] In re Brown, 2016 TTAB LEXIS 285, *3-4, 119 U.S.P.Q.2D (BNA) 1350, 1351 (Trademark Trial & App. Bd. 2016), internal citations and quotes omitted.

[xi] “Examination Guide 1-19 – Examination of Marks for Cannabis and Cannabis-Related Goods and Services after Enactment of the 2018 Farm Bill” USPTO (May 2, 2019) available at: https://www.uspto.gov/sites/default/files/documents/Exam%20Guide%201-19.pdf permalink: https://perma.cc/ZJ2U-NXB3

[xii] Id.

[xiii] In re PharmaCann LLC, 2017 TTAB LEXIS 177, 123 U.S.P.Q.2D (BNA) 1122 (Trademark Trial & App. Bd. 2017) available at:

https://e-foia.uspto.gov/Foia/RetrievePdf?system=TTABIS&flNm=86520135-06-16-2017

[xiv] PharmaCann, 2017 TTAB LEXIS at *8-10 (internal quotes and internal citations omitted)

[xv] Id.

[xvi] Matal v. Tam, 137 S. Ct. 1744, 1753 (2017)

[xvii] Id. at 1760.

[xviii] Iancu v. Brunetti, 204 L. Ed. 2d 714, 139 S. Ct. 2294 (2019)

[xix] Brunetti, 204 L. Ed. 2d at 720-721 (internal citations and page numbers omitted)

[xx] Id.

[xxi] Id.

[xxii] Brunetti, 204 L. Ed. 2d at 724, 139 S. Ct at 2303-2304.

[xxiii] Id.

[xxiv] Brunetti, 204 L. Ed. 2d at 724.

 

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