A Flower by Any Other Name: Cannabis Trademarks and Branding

The number of Canadian trademark filings covering cannabis-related goods and services has grown exponentially since the government announced its intention to legalize the production, distribution and sale of cannabis for recreational purposes.

What You Need To Know

• The race is on: more and more applicants who are licensed producers or other applicants in the cannabis supply chain are filing cannabis-related trademark applications.
• File trademark applications as soon as possible to protect your brand.
• "Trademark trolls" are rearing their heads in this space and can present difficulties if they file before you.
• There are significant restrictions under the proposed Cannabis Act on the use of your brand on packaging.
• Canada's new trademark laws will affect the protection and enforcement of your brand.
• Trademarks related to cannabis and cannabis accessories face different restrictions outside of Canada.

The race to register cannabis-related trademarks is well underway

Canada's cannabis trademark gold rush is being fueled in part by the imminent changes to the Trademarks Act (implementation is likely February 2019), which, among other things, will remove the requirement that a trademark be "used" prior to becoming registered. It is now faster and easier to register cannabis-related trademarks, even for entities that have not yet used the marks. It is also faster and easier for "trademark trolls" to apply for and "squat" on trademarks of other persons. As a result, the trademark register will continue to fill up quickly, and issues such as trademark trolling, dealing in trademarks and trademark register clutter are likely to become more prevalent.

For example, there are nearly 2,000 trademarks listed on the Canadian trademarks register with goods or services containing the word "cannabis" or "marijuana." Over half of those were filed since January 2017. Five years ago, less than 100 applications had been filed. That is an increase of 1,900 percent.

Given the dramatic increase in trademark applications for cannabis-related goods and services, it is important to act quickly to file trademark applications for your chosen cannabis brands in order to secure rights relative to third parties.

Background on the Cannabis Regulatory Proposal and Public Consultation

The federal government's proposed Cannabis Act may receive Royal Assent close to its initial target date in the summer of 2018, although the retail sale of recreational cannabis is unlikely to begin before August 2018 (see our bulletin here). Final regulations will be published as soon as possible following Royal Assent.

The proposed cannabis regulatory framework was initially released by Health Canada through a consultation paper on November 21, 2017 (Consultation Paper) (see our bulletin here, and Health Canada's document here). The framework outlined regulatory proposals in areas including the packaging, labelling, marketing and promotion of cannabis products. As noted in our bulletin here, Health Canada provided further information on the rules and expectations for packaging and labelling in its summary report of March 2018 (Summary Report), and it is very unlikely that there will be significant changes to the packaging and labelling requirements outlined in that Summary Report.

The implications for brand owners are significant, as there will be limitations on how brand names and trademarks can be used in the cannabis space. These factors should be considered in the early stages of brand development, to avoid incurring costs associated with trademarks that will ultimately be prohibited.

Cannabis Act – Restrictions on Trademarks/Brands

While the race is on to protect brands and obtain trademark registrations, the cannabis industry faces restrictions on how those trademarks can ultimately be used. Although Canadian trademark laws do not treat cannabis-related trademarks differently than other trademarks in terms of the ability to obtain registered protection and the rights (including ability to enforce) such trademarks, the proposed cannabis regulatory framework is more restrictive. Therefore, it is important to consider the regulatory scheme as part of overall brand strategy to avoid a situation where trademark protection is sought or obtained for a trademark that cannot ultimately be used.

With the government's release of the proposed Cannabis Act, the Consultation Paper, and most recently, the Summary Report, we now have a good idea of the likely scope of the regulatory framework relating to packaging and labelling (for more background, see our bulletin here). General restrictions that could have an impact on how brands and trademarks can be used are set out below. Trademarks will not be permitted to be used to promote cannabis goods:

• in a manner that appeals to young persons;
• by means of a testimonial or endorsement;
• by depicting a person, character or animal, whether real or fictional;
• by presenting the product or brand elements in a manner that evokes a positive or negative emotion about or image of, a way of life such as one that includes glamour, recreation, excitement, vitality, risk or daring;
• by using information that is false, misleading or deceptive, or that is likely to create an erroneous impression about the product’s characteristics, value, quantity, composition, strength, concentration, potency, purity, quality, merit, safety, health effects or health risks;
• by using or displaying a brand element or names of persons authorized to produce, sell or distribute cannabis in connection with the sponsorship of a person, entity, event, activity or facility; or on a facility used for sports, or a cultural event or activity; and
• by communicating information about price and distribution (except at point of sale).

These general restrictions can have an impact on the selection of trademarks in a way that is unique to the cannabis space, and should be considered early in the brand development process.

There are also more specific requirements and restrictions on packaging and labelling, including how trademarks are permitted to be displayed in relation to other information required for packaging. The following are a few key requirements and restrictions to consider.

• Standardized cannabis symbol must be displayed in the upper left of the display.
• Health warning messages must be displayed in black on a yellow background.
• THC/CBD content must be displayed.
• There are other general font and colour restrictions for packaging and labels.
• There are exemptions for the brand name (any font style and size, but no larger than health warning message, and must be a single uniform colour, no fluorescent or metallic).
• One additional brand element is permitted (this can be a logo, but no larger than the standardized cannabis symbol).

See these examples of permitted cannabis packaging and labelling, with the trademark/branding elements depicted in green and purple, as set out in the federal government's Summary Report.

International Considerations

It may be difficult to obtain international protection for trademarks relating to cannabis since the ability to obtain registered trademark protection for cannabis-related goods and services, particularly for cannabis itself, may be more limited in certain jurisdictions outside Canada.

In the United States, registered federal protection is currently unavailable for trademarks covering the sale of controlled substances, including cannabis. This is the case despite the fact that the medical and recreational use of cannabis is legal in many individual states.¹ Currently, over 2,700 applications have been filed for trademarks on the federal register in the United States covering goods and services containing the word "cannabis" or "marijuana," which is a dramatic increase from a year ago when only about 900 applications had been filed. Although the words "cannabis" and "marijuana" may be included in the goods and services listed in a United States application, applicants will be required to confirm that none of the activities listed are illegal in the United States. We expect that many of these applications list cannabis in a way that is not permitted and will not be accepted for registration on the basis that cannabis is still illegal on a federal level.

Similarly, in the European Union, trademarks cannot be obtained for goods and services that are "contrary to public policy or accepted principles of morality." However, the laws relating to cannabis, and therefore the "accepted principles of morality", differ throughout the European Union. For example, countries like Spain and Belgium allow private cannabis growth and consumption, while other countries like Croatia and Finland only allow limited medical use of cannabis. As a result, it may be difficult to obtain trademarks covering cannabis-related goods and services for the European Union as a whole. It may be easier, although less convenient, to obtain trademarks directly through member countries. Despite these potential difficulties, the number of trademark applications filed with the European Union Intellectual Property Office covering goods and services containing the word "cannabis" or "marijuana" have also increased in the past few years, although not to the same extent as in Canada and the United States.

Recommendations

We recommend that companies protect their space in this emerging market by filing trademark applications early. Companies are also well-advised to file broad applications, covering a range of goods and services. In addition, we recommend that the requirements of jurisdictions outside of Canada be considered before developing a global brand. Trademark clearance searches should be performed early in the brand development process, and before using a trademark or filing a trademark application, in order to determine whether there are existing trademarks on the register or in common law use which could cause concerns for the proposed brand. Companies should also keep in mind that there will be strict requirements for use of trademarks in association with cannabis products, so trademarks should be chosen with these restrictions in mind.

For more information about our branding and cannabis practice, please contact Michelle Nelles or Kevin Tuohy.

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¹ It may be possible to obtain state-based trademarks in the states where cannabis is legal, including for recreational use in Colorado, Alaska, California, Nevada, Oregon, Washington, Massachusetts, Maine, Vermont and the District of Columbia.