Dear Cannabis Business Owners: Clear Your Marks Before Investing in Branding

It has become an unfortunate trend for clients to come to me seeking trademark and brand protection advice after spending large sums of money on brand design, often having engaged with third-party designers, only for us to find out that their mark may infringe on the rights of a third-party. I really cannot stress this point enough: Conduct a trademark clearance search BEFORE you invest in the development of your brand. Failure to do so can result in huge amounts of wasted money, and can potentially land you in a trademark infringement lawsuit, which we’ve been seeing so many of lately:

Choosing a name and a brand that will not infringe the trademark rights of anyone else is critical, because even though your marijuana business might not be able to obtain a trademark of its own, other business owners can. And those trademark owners MUST enforce their rights if they don’t want to lose them.

So, what should you be thinking about when (before) developing your own brand? Most people are aware that they cannot use the same mark on the same goods or services as someone who already owns that trademark. A quick internet or USPTO database search can usually turn up these types of conflicts. But it’s more complicated than this. Not only can you not use a mark that is the same as a registered trademark, you cannot use a mark that is confusingly similar to a registered trademark. And not only do you need to be aware of registered federal trademarks, you must be mindful of registered state trademarks as well.

The Ninth Circuit, in AMF Inc. v. Sleekcraft Boats, developed an eight-factor test for determining whether one mark is confusingly similar to another. Here are those eight factors:

1. Strength of the mark;
2. Proximity of the goods;
3. Similarity of the marks;
4. Evidence of actual confusion;
5. Marketing channels used;
6. Type of goods and the degree of care likely to be exercised by the purchaser;
7. Defendant’s intent in selecting the mark; and
8. Likelihood of expansion of the product lines.

Some of these factors are clear-cut, and some are highly subjective. The Ninth Circuit has repeatedly reaffirmed that this is a flexible test, but it is useful to consider these factors when choosing a name for your brand that may be similar to another registered mark. For example, if the other, similar mark is a well-known brand, or a household name, your risk of infringement goes up. If the goods you are selling are similar to the goods provided by the other brand, your risk goes up. Likewise, if the marks are very similar, if similar marketing channels are used, or if either company intends to expand into the market of the other, your risk of infringement goes up. You’ll notice that the court also considers the intent of the defendant. This means that if you knew from the outset that your mark was similar to a registered mark, the court is less likely to look favorably on your case.

What due diligence should you perform before adopting a brand or company name? The best way to mitigate infringement risk is to have a comprehensive clearance search performed on your proposed mark by a company that specializes in such searches and then have that search analyzed by a trademark attorney well-versed in cannabis. With this report, your cannabis trademark attorney can advise you on the level of risk you face by assuming a particular brand. Your cannabis trademark lawyer can also give you initial feedback on the strength of your proposed mark, along with tips on choosing a brand that will be protectable. The real takeaway here is that you don’t need to use the exact same mark as another company to infringe that company’s trademark. Crossing the line into infringement takes a lesser degree of similarity than most people realize, so choose your brand name wisely.

And one other item to consider: Hiring a professional designer to develop your brand and design your logo will not guarantee that your brand and logo don’t infringe any third-party intellectual property rights or even that the brand or logo are eligible for trademark protection. In fact, many agreements utilized by these designers expressly state otherwise. So, don’t rely on your designer to clear your intellectual property rights. Once your designer proposes a brand name, take that name to your trademark attorney who can advise as to whether your mark is distinctive enough to qualify for trademark protection, and can facilitate that crucial trademark clearance search.