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Cannabis Trademarks: How to Coexist with Large Hairy Primates

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Can they live together?

A recent post here looked at the “Gorilla Glue” trademark dispute between a cannabis business and a glue maker. As we’ve often seen, the cannabis business gave up its brand, rather than litigating. Sometimes a settlement is the best choice. When the cannabis business is the smaller, newer, less financially-sound company, facing an established brand holder with more resources for litigation, it may be smart for the cannabis business to spend its money on rebranding rather than on litigation. But settlement is not the only option when a cannabis business uses a mark similar to the mark used by a non-cannabis business.

Imagine a hypothetical business, “Naturewave Furniture, Inc.” (“NFurn”). NFurn has been selling furniture for 25 years throughout the United States to consumers who want environmentally-friendly products. In 1995, NFurn federally registered “Naturewave” in international trademark class 20, “furniture.” Though NFurn is a player in the enviro-friendly products market, it is not a household name. Now imagine Naturewave Cannabis, LLP (“NCanna”), an Oregon cannabis producer that also sells branded rolling papers. In June 2016, NCanna registered “Naturewave” with the Oregon Secretary of State under class 131, “agricultural products,” and class 134, “tobacco & smokers articles.”

NFurn sues NCanna in federal court, alleging 1) NCanna’s use of Naturewave infringes on its trademark because confusion with NFurn’s Naturewave® mark is likely, and 2) NCanna’s use of Naturewave® to sell cannabis and rolling papers is diluting or tarnishing its mark. But NCanna has invested heavily in marketing its cannabis products and accessories under the Naturewave name, and its Naturewave cannabis products are popular and profitable. Does NCanna have good defenses to either claim? You bet it does.

The basic question for trademark infringement is whether consumers would mistake the source of the goods. Here, the goods offered by each party—furniture and cannabis—are unrelated. No stores sell both furniture and cannabis and the marketing channels for these two products do not overlap. The customers for both goods are sophisticated, careful shoppers. People looking for enviro-furniture usually spend at least 10 hours before buying a particular item. Cannabis consumers are known for research that borders on the obsessive, as shown by the proliferation of sites like MassRoots, Leafly, and Fresh Toast. Neither company is going to move into the other’s product line. Though NCanna had heard of Naturewave Furniture, the words “nature” and “wave” have different connotations in the different industries. NCanna isn’t branding itself as environmentally friendly, and NFurn isn’t suggesting its furniture will let the buyer “ride a wave.” It is unlikely a customer would think NFurn is the source of the cannabis sold by NCanna, or that one of NCanna’s customers would walk into a natural furniture store looking to buy cannabis.

The claim for tarnishment requires a different analysis. Under trademark law, the owner of a famous trademark can sue for using its mark in a way that dilutes or tarnishes the mark. There is no need to show a likelihood of confusion in a tarnishment claim; you only need to show that your mark is famous and similar to the accused mark. Although it is easier to list famous trademarks—Coke®, Amazon®, Google®, Starbucks®, Xerox®—than it is to define “famous,” generally a highly distinctive mark that is very well-known throughout the market, and has been used extensively and continuously for a long time, can be found to be famous. NFurn argues that NCanna’s use of Naturewave® with a traditionally illegal product will tarnish or dilute its mark. But is Naturewave® “famous” under trademark law? Arguably not, at least on our hypothetical facts. In that case, NFurn would not have a claim for dilution.

The upshot of this imagined case is that NCanna could evaluate NFurn’s lawsuit and know it had solid arguments to defend the case. The strength of the litigation position is, however, only one factor. Ultimately, whether to litigate a trademark dispute or settle or seek a coexistence agreement is a business decision for the cannabis company.

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What NOT to do with your Cannabis Brand: The Gorilla Glue Trademark Infringement Dispute

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The Gorilla Glue Company and GG Strains LLC, a Nevada-based cannabis company, entered a recent settlement agreement in the trademark infringement case brought by Gorilla Glue back in March. This case provided a perfect illustration of what NOT to do when developing your cannabis brand, and it now illustrates the possible consequences of infringing the trademarks of a well-established company.

In its complaint, Gorilla Glue, the manufacturer of a variety of adhesives sold under the “Gorilla” brand and distinctive logo, alleged trademark infringement, dilution, unfair competition, and cybersquatting. The allegation was that by marketing their strains under “confusingly similar” names, GG Strains was trading off the goodwill and reputation established by Gorilla Glue over the course of 23 years.

The trademark infringement in this case appears to have been flagrant – GG Strains utilized a logo for its “Gorilla Glue #4” strain that incorporated a gorilla, and certainly conjured an association in the minds of consumers with the famous adhesive brand. But though this case involved a pretty flagrant example of trademark infringement – after all, the infringing word mark was exactly the same as the registered Gorilla Glue mark – the standard for infringement is actually significantly lower. 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.

We’ve written before about the standard for assessing likelihood of confusion, but it warrants repeating. The Ninth Circuit (which sets the law on this for Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington) 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.

In the Gorilla Glue case, the intent of the defendant would likely have been a factor weighing heavily in favor of the plaintiff. It would have been tough for GG Strains to make a case that they weren’t intentionally referencing and playing off of the brand of the well-known adhesive company.

And the consequences for GG Strains’ branding choices were serious. The settlement agreement gives GG Strains twelve months to cease using the word “Gorilla,” an image of a gorilla, or any of the “Gorilla” trademarks. After December 18th of this year, GG Strains can only use their current “Gorilla” marks preceded by a new name, together with the phrase “formerly known as.” Affiliated companies, dispensaries, cultivators and other partners must stop using the word “gorilla,” or any Gorilla Glue trademarks or imagery, and licensees of the strain have ninety days from September 19, 2017 to cease use of the gorilla word, images or trademarks.

The founder of GG Strains estimates that the dispute and rebranding costs have totaled around $250,000. And the costs would have been astronomically higher had the case proceeded to litigation. This should serve as a lesson to cannabis business owners that your brands will be treated no differently than those in any other industry. Big brand owners are taking note of what cannabis businesses are doing, and they are not hesitating to enforce their trademark rights against cannabis brands in court.

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Do Cannabis Patents Create Monopolies?

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Our previous post in this series discussed the legal sources for cannabis patent rights. This post and later posts will address some questions about what patents could mean for the cannabis industry.

Today’s question is: Do cannabis patents create monopolies?

Today’s short answer is: Yes and No, but probably less than you might think.

A patent is a government-created monopoly, giving the patent holder an exclusive right to make, use and sell the patented invention. A patentee doesn’t have to let anyone else use her patent (there is no mandatory licensing in the United States), or even use the patent herself. Once the patent expires, it belongs to the public forever. Though the law abhors a monopoly, patents are an exception. The theory is that granting inventors a few years of exclusivity encourages the creation of products beneficial to society.

A patent is not an unlimited monopoly, however. To start, a patent is only good for a limited time, usually about 20 years from the patent filing date. Since it can take three or more years to get a patent granted, that often means a patent lasts 17 years or less in the real world. Patents cannot be renewed; once the patent expires, anyone can practice it at no cost.  Compared with trademarks, which could have indefinite terms, or copyrights, some of which can last as long as a century, the patent term is short.

Also, only inventions that are new and not obvious can be patented. If something has been publicly used or on sale for at least a year, it’s probably unpatentable by anyone. The legal meaning of “obvious” is different and more complicated than the dictionary definition. For our purposes, if a claimed invention could be readily made by a skilled person who was familiar with the prior art, it is obvious. These two requirements of novelty and nonobviousness are intended to ensure that the patent system narrowly rewards creators, not merely collectors or aggregators of products to which the public already has access.

Perhaps most importantly, a patent’s coverage is often much narrower than it appears. You can consider a patent to be like a real estate deed. The deed for your house may refer to the property at “1st and Main,” but that doesn’t mean you own everything at that address. Your actual property lines are set out in the deed’s legal description, e.g., by detailed surveying designations. Similarly, the scope of a patent is limited by the claim or claims, which are found in the last part of the patent following the words “I claim” or “What is claimed.” Here is a hypothetical cannabis utility patent claim, based on an issued patent:

What is claimed is:

1) A cannabis plant that produces a flower comprising:

[a] a terpene profile where myrcene is not the dominant terpene;
{b] a terpene profile defined as terpinolene, alpha phelladrene, and myrcene;
[c] a terpene oil content greater than 1.5%; and
[d] a CDB content of less than 3%.

Properly interpreting a patent claim is a notoriously squirrely activity. Even if you understand the technical features of the claim, there is an entire body of often-conflicting law on claim interpretation. But one principle is paramount in determining the scope of a claim: the patent covers only inventions that have each characteristic, known in patent law as an “element,” set out in the claim. If a plant had elements [a], [c] and [d], but did not have terpinolene in its terpene profile as required by element [d], it would not infringe that patent.

Our next post will consider more issues about patents and their effects in the cannabis industry.

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Hashish Patents: The 101

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Cannabis patents
Hashish patents

In hashish mental property (IP) regulation, as in most areas of hashish regulation, separating the flowers from the weeds is troublesome. There’s loads of misinformation out there on the web and elsewhere about whether or not pot is protectable beneath patent or comparable legal guidelines, and what patentability means for the business.

This submit provides an summary of IP safety probably obtainable for hashish strains and associated crops. Beneath U.S. federal regulation, new plant varieties may be protected beneath the Plant Selection Safety Act (PVPA), as a plant patent underneath the Plant Patent Act (PPA), or as a utility patent beneath the Patent Act. Plant varieties may be commerce secrets and techniques or topic to contractual (licensing) safety.

PVPA: The Plant Selection Safety Act protects sexually reproduced (by seed) or tuber-propagated plant varieties, apart from fungi or micro organism. The statute, which is run by the Division of Agriculture, often supplies 20 years of almost-exclusive rights after the date on which the plant selection is licensed. A spread for which PVPA certification is sought have to be new, which is analogous to the novelty requirement underneath the Patent Act. The variability should even be distinct, uniform, and secure, accordingly to USDA laws. A certificates holder might pursue civil infringement cures in courtroom.

PPA: The Plant Patent Act protects asexually reproduced (e.g., by cuttings, grafting and budding) plant varieties, which aren’t tubers. For PPA safety, the Patent and Trademark Workplace requires that a selection be new, nonobvious, and have some de minimus utility, amongst different issues. These necessities are widespread to all U.S. patents, and are the topic of in depth statutory and case regulation interpretation. As well as, a patented plant should differ from recognized crops by at the very least one distinguishing attribute which is greater than that brought on by totally different rising circumstances or fertility. A plant patent is restricted to at least one genome of the plant, so that mutations or hybrids wouldn’t be coated within the patent, however can be individually patentable. Plant patents expire 20 years after the submitting date of the appliance for the patent. A patentee might pursue civil infringement cures in courtroom.

Patent Act: Utility patents underneath non-Plant Patent Act regulation could be granted for crops, seeds, plant varieties, plant elements (e.g., fruit and flowers), and processes of manufacturing crops, plant genes, and hybrids. As with different patents, a spread sought to be patented have to be new, nonobvious, and have some utility, amongst different issues. Civil infringement cures can be found in courtroom.

Commerce secrets and techniques/licensing: Although commerce secret safety may be obtainable to plant varieties, the power of a talented individual to independently reproduce the variability in query might get rid of any protectable secret. Some breeders have sought to guard plant varieties by licensing contracts that purport to restrict the use or distribution of the variability. Typically referred to as “bag-tag” or “seed-bag” licenses, these are usually coated by state regulation.

The PVPA, the PPA, and the Patent Act all present unique rights for 20 years, which might be enforced in courtroom. The PVPA and the PPA differ primarily relying on whether or not the plant is sexually (PVPA) or asexually (PPA) reproduced. Utility patents might have extra stringent necessities for purposes than plant patents, however usually supply broader protections than plant patents. Particularly, whereas a plant patent has solely a single declare that defines the scope of the patent, a utility patent can have a number of claims, every addressing totally different elements of the plant or methods of utilizing the plant which are disclosed within the specification of the patent. Additionally, utility patents can be found for each sexually and asexually reproducing crops.

IP safety for hashish crops was theoretical, however this modified lately. Within the final two years, the PTO has issued plant patents, e.g., U.S. PP27475 P2 (Hashish Plant Named ‘Ecuadorian Sativa’), and utility patents, e.g., U.S. 9,095,554 (Breeding, Manufacturing, Processing, and Use of Specialty Hashish). Within the subsequent installment of the Hashish Patent Primer, I’ll talk about what hashish patents imply to the hashish business and attempt to dispel a few of the patent myths widespread to the business.

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Hashish Litigation, Half three: I would like my very own IP, or the way to settle possession disputes earlier than they begin

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I would like my very own IP….

For those who co-own a hashish enterprise, you in all probability have a proper working settlement that units out who owns what—a minimum of should you’ve been studying this weblog. As I famous in my earlier weblog publish, your hashish firm in all probability owns some mental property (IP): logos, copyrights, commerce secrets and techniques, or patents. However who owns the IP, if, as is widespread, the working settlement is silent on this difficulty? You might not have thought a lot about this, however it is best to. As any divorce lawyer can inform you, many assumptions about who owns what transform mistaken.

LIke another sort of property, IP is topic to basic default guidelines that set up possession, a minimum of to start with. The default proprietor of a patent is the human inventor. The default proprietor of a trademark is the entity (human or not) that makes use of the mark in commerce. Warning: it’s simpler to state these IP default guidelines within the summary than to use them in the actual world. For instance, although there’s an possession rule in copyright regulation referred to as “work for rent,” it seems it doesn’t apply to many people who find themselves employed to create copyrightable works. Making errors about these default guidelines can result in disappointment, or litigation.

You’ll be able to diminish this danger, nevertheless, by making your personal IP possession guidelines. Nearly all the default IP guidelines could be contracted round. A well-drafted IP possession contract permits the events to rearrange their conduct understanding who will personal the ensuing IP. It’s going to additionally discourage those that may attempt to reap the benefits of uncertainty to say possession of IP.

Co-owners of a enterprise: IP points come up in reference to a enterprise formation in at the very least two conditions: (1) some or all the house owners come to the enterprise with preexisting IP, like model names or commerce secrets and techniques; and (2) the enterprise will create new IP throughout operation. An IP settlement can outline possession in order that the enterprise won’t be left with out necessary belongings (such because the model identify of the corporate) if the companion who introduced IP to the enterprise decides to go away. It may possibly additionally present methods to guard IP owned by the company, akin to by requiring inventors to help with patent filings or assign IP rights.

Offers with different companies: Many offers between companies have IP penalties. For instance, a three way partnership to create new rising processes might end in creating commerce secrets and techniques or patentable innovations. In a distribution settlement, it’s common for one celebration to have a license to make use of the opposite celebration’s logos. Figuring out the possession of IP is crucial when two corporations work collectively.

Employer/worker/unbiased contractor: Any time a enterprise entity pays a human being to create one thing, IP possession points will come up. Many companies assume they know the default guidelines that apply relying on whether or not the human is known as an “worker” or an “unbiased contractor.” The principles distinguishing these classes, nevertheless, differ from state to state, and are notoriously exhausting to use. So, an IP settlement shouldn’t activate the classification of the employee. Having a strong IP possession settlement will permit each events to focus on creating IP, and can decrease the dangers of disputes if and when the connection ends.

IP possession agreements needn’t be separate paperwork. The suitable language may be included in your hashish firm’s working settlement and even in its worker handbook. In case you actually need your personal IP, nevertheless, don’t depend on the default possession guidelines.

For extra earlier posts on hashish litigation, go right here for Cannnabis Litigation: Recognizing Felony Regulation Points in Hashish Instances and right here for Hashish Litigation: How you can Keep away from IP Disputes by Altering Your Oil Filter.

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Recognizing Felony Regulation Points in Hashish Instances: Simply Take 5

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I’m a civil hashish litigator for Harris Bricken. I’ve litigated hashish instances involving disputes about medical and leisure grows, disputes between former enterprise companions who at the moment are going their separate methods, and instances involving hashish mental property, a candy spot for me. This text is the primary in a collection aimed toward hashish litigation.

Right now’s matter is felony regulation. I don’t deal with felony instances, however that doesn’t imply I can ignore felony regulation points in my civil instances. Felony regulation is especially necessary in civil hashish instances, since conduct that’s completely authorized beneath state regulation is, in fact, unlawful beneath federal regulation. The danger of federal felony legal responsibility signifies that a hashish litigator ought to a minimum of contemplate whether or not a shopper in a civil case ought to depend on the fifth Modification privilege towards self-incrimination, which might be asserted in civil proceedings, in reference to oral testimony, pleadings, or requests to supply paperwork.

How do consider whether or not to advise your shopper to take 5, i.e., assert the fifth Modification? Right here is an summary of the three primary authorized points for hashish litigators, that will help you analyze whether or not associating felony counsel is acceptable in your shopper’s circumstances. I’ve said usually accepted guidelines of regulation under, however in fact it’s worthwhile to do your personal analysis to see whether or not these guidelines apply to any specific case.

1)         Prior statements in a civil hashish case could possibly be admissions of felony exercise in one other case: A big a part of each civil case, together with hashish instances, is explaining the information which help your claims, and which contradict your opponent’s. A civil litigant will make statements about details in her pleadings, in discovery earlier than trial, or in testimony at trial. It’s a protected working assumption that nearly something that the litigant, or her lawyer, says about information in a civil hashish case will probably be admissible in a later felony continuing, even when the sooner assertion shouldn’t be made beneath oath. An instance may be the opening allegation in a grievance towards a enterprise associate in a develop: “Pursuant to an settlement, plaintiff and defendant labored collectively to domesticate hashish crops, which they meant to be bought, and did promote, pursuant to this state’s leisure hashish legal guidelines.”

2)         Does testifying to probably incriminating information within the civil case waive the privilege? Courts have held that waiver of the fifth Modification privilege in a civil case, e.g., by testifying to incriminating information, won’t waive the privilege in later legal proceedings. However the sensible impact of this precept is restricted. Whereas a defendant who has waived her privilege in a previous civil case might testifying in a later legal case, any prior incriminating statements can be utilized towards her, even with out her testimony.

three)         Dangers of asserting the privilege within the civil case: In a legal case, the very fact finder might not infer that a defendant is responsible as a result of she asserted the fifth Modification. In civil instances, nevertheless, a jury might draw destructive inferences towards a celebration who declines to testify by counting on the fifth Modification. So, a lawyer within the civil case may argue: “Plaintiff claimed privilege when requested whether or not she grew hashish. Doesn’t this recommend that she did develop hashish?”

Evaluating the authorized points is simply step one in deciding whether or not to advise shopper to say the fifth Modification. The harder problem is forecasting whether or not a prosecutor—now or sooner or later—will select to deliver felony expenses for conduct that’s authorized beneath state regulation. In fact, the danger of federal prosecution is one thing that most individuals within the hashish enterprise have thought-about—or ought to have thought-about—in a method or one other. Simply keep in mind to hum a couple of bars of Paul Desmond’s immortal jazz piece in your option to your subsequent hashish gig.

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SCOTUS Guidelines Offensive Logos Are Entitled to First Modification Safety: Good for Hashish?

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Will the wraps come off hashish logos?

Final week, in an Eight-Zero opinion within the Matal v. Tam case, america Supreme Courtroom dominated that the disparagement clause of the Lanham Act violates the First Modification’s free speech clause. For these unfamiliar with the case, in 2011, Simon Tam tried to register The Slants (the identify of his band), as a federal trademark. However the USPTO analyzing lawyer rejected the appliance, on grounds that the identify was an offensive reference to Asians.

Part 2(a) of the Trademark Act, 15 U.S.C. §1052(a), bars any trademark registration of immoral, misleading or scandalous matter, and states that no trademark might “disparage … or convey … into contempt or disrepute” any “individuals, dwelling or lifeless.” Some traits of a mark that may end up in rejection embrace references to intercourse, offense to faith, race or to honor, and references to illegality. Interpretation of this prohibition is (and also you in all probability would guess) each subjective and fluid, creating a great deal of uncertainty as to what truly constitutes disparagement.

In response to Tam, “he and his bandmates needed to reclaim the time period as a badge of satisfaction.” The Courtroom of Appeals, and now the Supreme Courtroom, discovered that the disparagement clause “offends a bedrock First Modification precept: speech is probably not banned on the bottom that it expresses concepts that offend.” In Justice Kennedy’s concurring opinion, he said that a “regulation that may be directed towards speech discovered offensive to some portion of the general public might be turned towards minority and dissenting views to the detriment of all … The First Modification doesn’t entrust that energy to the federal government’s benevolence. As an alternative, our reliance have to be on the substantial safeguards of free and open dialogue in a democratic society.” We couldn’t agree extra.

So how does this opinion have an effect on hashish trademark purposes? Substantively, not lots. Acquiring a federal trademark registration to be used on cannabis-related items presents a number of challenges, and none of that has modified. You continue to should make authorized use of your mark in commerce to acquire a federal trademark registration.

However we have been seeing the rejection, no less than initially, of some trademark purposes for items and providers that have been ancillary to the hashish business – items and providers that CAN qualify for registration – based mostly on references within the mark to immoral or scandalous matter. Finally, subjective denial of a trademark software based mostly on the character of speech it accommodates shouldn’t usually be inside the energy of the PTO. It stands to cause that if disparaging marks can’t be denied registration and are protected by the First Modification, the identical principal ought to use to “immoral” or “scandalous” marks. Thus, the PTO might not have the ability to reject purposes that make reference to issues like being “excessive,” which might be thought-about “immoral” or “scandalous,” as a result of these references are protected by the First Modification.

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Hashish IP Licensing Offers and SB 5131

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As we wrote a couple of days in the past, the Washington State Legislature just lately handed SB 5131, which updates Washington’s hashish legal guidelines and features a provision that explicitly addresses licensing agreements. The invoice has but to be signed by Washington Governor Jay Inslee, however we’re however exploring what the implications of those new laws might be for our shoppers with present and pending mental property licensing offers.

Part 16 of the invoice reads as follows:

Sec. 16.   A brand new part is added to chapter 69.50 RCW to learn as follows:

  • A licensed marijuana enterprise might enter right into a licensing settlement, or consulting contract, with any particular person, partnership, worker cooperative, affiliation, nonprofit company, or company, for:

    • Any items or providers which are registered as a trademark beneath federal regulation or beneath chapter 19.77 RCW;
    • Any unregistered trademark, commerce identify, or commerce gown; or
    • Any commerce secret, know-how, or proprietary info used to fabricate a hashish product or used to offer a service associated to a marijuana enterprise,
  • All agreements or contracts entered into by a licensed marijuana enterprise, as approved underneath this part, have to be disclosed to the state liquor and hashish board.

On its face, this provision does little to vary issues for these with present licensing offers, besides that these offers will now have to be disclosed to the licensee’s enforcement officer. However the provision does validate the place that a lot of these licensing agreements have been permissible underneath the principles all alongside, which supplies some degree of safety to the events as to the legitimacy of the contracts.

The large query that is still unanswered is whether or not the State’s acknowledgement of the permissibility of “licensing settlement[s]” can also be an acknowledgement of the permissibility of ordinary trademark licensing practices, together with royalties. At present, it’s impermissible beneath the principles for a licensor to obtain a royalty based mostly on gross sales or income from a licensee, the place that licensor has not been vetted by the Liquor and Hashish Board (LCB) as a real social gathering of curiosity. Undisclosed true social gathering of curiosity relationships are grounds for license cancellation by the LCB, so it’s essential to construction these offers so they don’t implicate Washington’s true get together of curiosity guidelines when coping with an out-of-state licensor, or a licensor that merely wouldn’t meet the state’s necessities.

Even when state hashish regulation reform in Washington makes the state regulation compliance piece of any trademark licensing deal extra simple, these offers are nonetheless certainly not as reduce and dry as your sometimes IP licensing deal. Possession of IP within the hashish business stays a difficult challenge, largely as a result of the USPTO won’t problem federal trademark registrations for cannabis-related marks. Hashish corporations routinely come to us with proposed licensing offers the place primary due diligence shortly reveals the licensor merely doesn’t personal what it purports to personal. As a refresher, in case you are trying to get a license for an additional firm’s IP, listed here are probably the most primary questions it is best to be capable of reply about that different firm and its IP:

  • Does the licensor personal any federal trademark registrations?
  • In that case, what items and/or providers do these trademark registrations cowl?
  • Was the outline of products and/or providers filed with the USPTO correct and true? Have been there attainable misrepresentations?
  • Are the trademark registrations based mostly on precise use, or upon intent-to-use?
  • What representations and warranties is the licensor making (or, typically extra importantly, not making) relating to the marks?
  • If the licensor doesn’t personal any federal trademark registrations, is it licensing another person’s logos?
  • Does the licensor have a grasp licensing settlement? Do the phrases of any proposed sub-licensing settlement mirror that grasp licensing settlement?
  • What high quality management requirements will you be held to by the trademark proprietor? Might these requirements quantity to impermissible management over a licensee beneath Washington’s hashish guidelines?
  • Has the trademark proprietor warranted to maintain all USPTO filings up-to-date?
  • Does the licensor personal any state trademark registrations?
  • In that case, has the licensor made lawful use of its mark in commerce within the state of registration?
  • Does the licensor have any widespread regulation trademark rights? Can the licensor even legally purchase widespread regulation trademark rights in your jurisdiction?

This can be a substantial record, nevertheless it solely scratches the floor of the problems you and your hashish IP counsel should contemplate earlier than you enter into any IP licensing deal. Events are sometimes fast to skip straight to negotiating business phrases for a deal, with out ever assessing whether or not the rights they’re licensing truly exist. Simply as with all different sort of property, like a home or a automotive, a licensor of mental property should truly personal the rights to that property to have the ability to confer these rights to a different celebration. Appears primary, nevertheless it’s really surprising to see the offers we’ve seen put collectively by attorneys who both have no idea hashish or, most of the time, have no idea the intricacies (and even the fundamentals) of mental property regulation.

Although hashish IP licensing offers stay difficult, it’s encouraging to see the Washington State Legislature acknowledge and condone their existence. We’ll be following this invoice intently to see whether or not its passage leads to any modifications to the present difficulties surrounding a royalties-based cost construction.

So keep tuned.

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Good Information for California Hashish Model House owners (Lastly)

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One of many largest hurdles for California hashish model house owners has been the lack to safe California state trademark registrations for his or her marks. This has been some extent of confusion for a lot of shoppers who’ve efficiently registered their logos in states like Washington, Oregon and Colorado, and hoped to do the identical in California.

Till lately, the California state authorities has been steadfast in refusing to register marks used on hashish, regardless of hashish having been authorized in California since 1996. This coverage was rooted in Sections 14270-14272 of the Mannequin State Trademark Regulation of the California Enterprise and Professions Code (CBPC), that are merely titled “Miscellaneous.” Part 14272 states the next:

The intent of this chapter is to offer a system of state trademark registration and safety considerably in step with the federal system of trademark registration and safety beneath the Trademark Act of 1946 (15 U.S.C. Sec. 1051 et seq.), as amended. To that finish, the development given the federal act must be examined as non-binding authority for deciphering and construing this chapter.

Recall that there are 3 ways by which a model proprietor can set up trademark rights:

  1. Through the use of the mark in reference to their items or providers (legally) in commerce;
  2. By registering the mark with the USA Patent and Trademark Workplace (USPTO); and
  3. By registering the mark with an applicable state trademark registry.

California hashish corporations have, so far, wanted to depend on federal logos registered with the USPTO (if they might get them for ancillary items or providers), and customary regulation rights that will not even exist in California, given Part 14272 of the CBPC.

However Meeting Invoice 64 will change all this. Recognizing the inconsistency between present state trademark regulation provisions and the brand new hashish laws, AB 64 states the next:

This invoice, for functions of marks for which a certificates of registration is issued on or after January 1, 2018, would, however these provisions, authorize using specified classifications for marks associated to medical hashish and nonmedical hashish items and providers which might be lawfully in commerce underneath state regulation within the State of California.

That is nice information for California hashish corporations, however there are some things to remember:

  1. State logos won’t be obtainable till January 1, 2018, after which just for hashish corporations that function in compliance with California state regulation. Unlicensed hashish companies will not be eligible for California state trademark safety;
  2. The identical difficulties surrounding cross-state IP licensing offers will nonetheless exist in California (see Hashish IP Licensing: It’s Difficult); and
  3. Federal logos are nonetheless unavailable for items and providers that violate federal regulation, so creating a model safety technique that includes federal trademark registrations for ancillary items, and state logos for hashish items, will nonetheless be key. See Hashish Logos: Again to the Fundamentals

Although the safety afforded by a state trademark is geographically restricted to the state of registration, state logos do present some degree of safety larger than widespread regulation rights. And AB 64 will give California hashish enterprise house owners a lot larger flexibility in creating a model safety technique that encompasses their hashish merchandise.

 

 

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The Hashish Counterfeit Battle Has Begun

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There are numerous fakes on the market, within the hashish business too.

As we’ve beforehand written, my regulation agency, which does appreciable worldwide commerce and China regulation work along with our regulated substances follow, has on all fronts been getting an inflow of shoppers complaining about counterfeit hashish items and in search of our assist in coping with the issue. The issue of counterfeit items within the hashish business has solely continued to develop during the last yr.

I used to be interviewed earlier this yr concerning the lawsuits introduced by Roor pipes towards almost 200 smoke outlets and comfort shops, alleging these shops are promoting counterfeit Roor bongs in violation of Roor’s U.S. federal trademark registration. Although these lawsuits could also be on unsure floor from a federal trademark regulation perspective, Grenco Science, maker of the G-Pen model vaporizer, just lately discovered success in federal courtroom towards counterfeiters.

Earlier this yr, Grenco sued greater than 65 totally different on-line retailers for promoting counterfeit G-Pen merchandise. A lot of the offending corporations have been based mostly in China, which is in line with nearly all of the counterfeit instances my agency handles. A number of the lawsuits settled out of courtroom, however most of the Chinese language corporations failed to answer Grenco’s complaints filed in courtroom – additionally a standard prevalence when making an attempt to pin down a Chinese language firm in U.S. courtroom. In mild of this, a federal decide in Illinois granted Grenco $47 million in damages, which equates to $1 million from every of the 47 corporations discovered to have infringed Grenco’s federal logos, in addition to injunctions towards every of the businesses ordering them to stop gross sales of the counterfeit items.

In fact, getting a judgment towards a Chinese language firm for trademark infringement is just half the battle – Accumulating on these judgments is one other matter. Oftentimes, U.S. judgments towards Chinese language corporations are value little or no. A U.S. judgment towards a Chinese language firm can result in assortment, however for that to happen, one should know concerning the operations of the Chinese language firm and one have to be ready to be legally artistic in determining how and the place to behave in utilizing the U.S. judgment to go after the Chinese language firm’s belongings.  We’ve written extensively about this course of on our agency’s China Regulation Weblog, and you may learn extra about it right here and right here.

Given the problem in implementing these judgments it’s crucial that you simply as a enterprise proprietor take preventative steps to beat back counterfeiters, and to know what to do within the unlucky occasion somebody does counterfeit one among your items. And as we inform all our shoppers: investing in these preventative steps now’s all the time approach inexpensive than preventing a authorized battle (and making an attempt to implement a judgment) in courtroom down the street.

So what preventative steps ought to hashish companies take to deal with counterfeiting? Prevention hinges on first figuring out your mental property (IP), figuring out what classes it falls into, after which defending it accordingly within the related jurisdictions. The design of a novel system like a water pipe, for instance, could possibly be topic to patent safety. Although we’ve blogged extensively concerning the problem in acquiring federal hashish logos, federal patent regulation doesn’t include the identical “authorized use in commerce” requirement, or a prohibition on “immoral or scandalous” matter. A patent is the grant of a property proper to the inventor, issued by the USA Patent and Trademark Workplace (USPTO), and this property proper provides the inventor “the fitting to exclude others from making, utilizing, providing on the market, or promoting the invention in the USA or importing the invention into the USA.” Patents are sometimes probably the most highly effective device in preventing counterfeit items.

Patent infringement isn’t the one means counterfeiters can rip off merchandise. Oftentimes, when speaking about counterfeits, we’re speaking about trademark infringement (as within the G-Pen and Roor instances) relatively than patent infringement. A counterfeiter might, for instance, slap your emblem on its vape pen, exploiting the goodwill and notoriety you’ve established by way of your model. In fact, one of the simplest ways to stop trademark infringement is to register your trademark with the USPTO. Although it isn’t attainable to acquire a federal trademark to be used on items that violate the Managed Substances Act (CSA), it’s typically attainable to acquire trademark safety for items that don’t violate the CSA, like many people who smoke’ equipment. A trademark provides the proprietor the unique proper to make use of their mark on the required items in commerce, and it provides the proprietor a proper to hunt treatment in federal courtroom within the occasion of infringement.

In case you are having your merchandise manufactured in China (or anyplace else abroad), as is the case today with so lots of our shoppers, it’s essential to shield your IP there as properly. As a result of in the event you don’t register your trademark or your design patent in China, another person virtually definitely will after which that another person will have the ability to cease your merchandise from leaving China as a result of these merchandise violate their mental property! For extra on this, take a look at China: Do Simply ONE Factor: Register Your Logos AND Your Design Patents, Half 1 and China: Do Simply ONE Factor: Register Your Logos AND Your Design Patents, Half 2. You also needs to take a look at Your China Manufacturing unit as your Hardest Competitor for the contractual steps it is advisable take to stop your personal producer in China from promoting your product worldwide, and certain at costs far decrease than you possibly can ever match.

However logistically, how does implementing your IP rights towards counterfeiters play out? Sometimes, it doesn’t make sense to take the alleged infringer straight to courtroom. Litigation is dear, and there’s typically room to barter. When you understand who the infringing get together is, your lawyer can contact them with a stop and desist letter instantly. However when the celebration is, for instance, a 3rd social gathering vendor on a bigger platform like Amazon or Alibaba, monitoring down the infringer is far more troublesome. See additionally China Counterfeiting: eight Widespread Myths and Alibaba and Small Enterprise House owners.

The protocol for coping with on-line retail platforms in taking down counterfeit items will range relying on the corporate. With each on-line retail platform with which our legal professionals have labored (be they in the USA or in China), the method is expedited tremendously when our shopper alleging a counterfeit is ready to supply up proof of its personal IP rights. That is notably true with logos, the place infringement is usually obvious, and the retail platform can shortly determine to droop a counterfeiter’s account. With out verifiable IP rights, the retail platform is put in a troublesome place of getting to determine who has the fitting to promote what. This includes difficult authorized evaluation, and takes substantial time and assets, in addition to back-and-forth with each events. Within the meantime, you’re possible dropping enterprise. See How To Take away Counterfeits From Alibaba.

So the lesson right here is two-fold. First, ensure you’ve recognized your mental property and that you simply’ve taken each step attainable to register and shield it. Second, for those who suspect an organization is promoting a counterfeit of your product, contact your lawyer instantly and develop a technique for blocking the counterfeit gross sales, whether or not by way of direct communication with the counterfeiter, or by working with the related on-line retail platform. There’s typically a lot that may be completed to cease a counterfeiter earlier than resorting to submitting a lawsuit, and ending up with probably un-collectable judgment.