The commercialisation of cannabis products is resulting in one of the fastest growing and unpredictable emerging markets globally. Outside of the pharmaceutical industry, differing national approaches to legality and enforcement makes life difficult for entrepreneurs and business owners looking to capitalise on the rapidly changing commercial cannabis landscape either side of the Atlantic.
Content and effects of cannabis products
Cannabis may be the first commercial product to undergo decriminalisation on a major scale since alcohol in the 1920s. Understandably this is not a clear cut and uniform process. Cannabis products are naturally occurring, with different strains of the cannabis plant containing a variety of different naturally occurring compounds found in the cannabis plant, which are known as cannabinoids.
The most notable cannabinoid is tetrahydrocannabinol, or THC. THC is the primary psychoactive compound in cannabis, and the cannabinoid most commonly associated with recreational use. Cannabidiol, or CBD, is another major constituent cannabinoid. CBD does not have psychoactive effects at low doses, and typically makes up around 40% of the cannabinoids in cannabis.
The mix of cannabinoids found in natural products will never be sufficiently pure for scientific, pharmaceutical or commercial uses. The absolute purity required for pharmaceutical cannabis applications is big business - see our article on the uptake of cannabis products in the medical field. The distinction between the THC and CBD content of a cannabis product greatly affects that product’s legality. Recreational cannabis, commonly referred to marijuana, includes higher THC content, with the THC levels of any cannabis crop determining legality. Prohibited cannabis crops are typically defined as including greater than 0.3% THC by dry weight for the US, and 0.2% in the UK (“THC products”). In the US, below 0.3% THC content can result in legal, CBD-based products (“CBD products” or “hemp products”) without THC’s pronounced psychoactive effects and with a host of prospective health benefits. The threshold in the UK for CBD products is lower, at 1mg THC per pack of a product.
The distinction between THC and CBD is therefore an important one with regard to trade mark protection, legality, and the ability to seek national or federal registered protection.
US approach – federally forbidden, locally legalized?
Recent legal developments development have loosened US federal restrictions on hemp and CBD products. The US 2018 Farm Bill received bipartisan support, removing hemp products from the statutory definition of marijuana and the Drug Enforcement Administration’s schedule of Controlled Substances. This results in sweeping changes to the way cannabis traders can operate with hemp products – including removing the threat of federal prosecution for banks and payment processors who want to engage with the estimated $20bn US hemp industry.
The USPTO will also allow narrow federal trade mark registrations to cover these hemp products, paying strict notice to Food and Drug Administration (FDA) regulations. If the goods are not FDA approved, including by specific reference to THC content, trade mark registrations will be refused.
THC products in all forms are illegal at a federal level, and therefore a federal, US-wide trade mark cannot be obtained for cannabis goods with >0.3% THC content. However individual US states have their own laws, which has resulted in cannabis being effectively decriminalized (or not enforced) at a state level. This patchwork of legislation results in a criminalization “spectrum” across the USA as a whole, from outright illegal, through varying medical uses being permitted, and legal recreational use.
A business owner may therefore be able to obtain a series of state-wide trade mark registrations for their THC products, with each registration being slightly different. However each state trade mark registration offers narrower protection than federal rights, both geographically and to the scope of protection given. This resultant complicated web of permitted uses does not give certainty for brand owners, and makes enforcement significantly more difficult than if a single federal trade mark was obtainable for those goods.
UK – medical powerhouse, but still criminalized cannabis
The UK market is relatively more simple. In 2018, the UK was reportedly the world’s largest exporter of medical cannabis, and remains at the forefront of medical cannabis products. Brand owners from the UK and abroad are typically looking to develop such a market, and second guess future changes in legality. Recreational THC products currently remain illegal at any level in the UK, but recent changes in law have however allowed the introduction of CBD products into the mainstream health food and supplement markets.
In principle the UK IPO will allow registration of a trade mark for cannabis goods assuming these are not “contrary to public policy”. CBD, hemp, and various other legally permitted varieties of cannabis are entitled to national registered trade mark protection, but objections will be raised against trade mark applications covering cannabis goods which fall foul of the Misuse of Drugs Act 1971.
Trade mark Examination
In both the US and UK, trade mark applications for cannabis products are still examined in the same way as any other trade mark for any other goods. Those marks which are descriptive, non-distinctive, offensive, or which face objections from third parties on the basis of confusingly similar rights, may still be rejected. Reference to slang terminology, commonplace imagery, and other non- or low-distinctive character elements may result in an application being refused if the examiner feels that the mark is unable to distinguish the goods or services of one proprietor from those of another.
Both UK and US trade mark applications include a sworn statement that the owner has a bona fide intention to use the mark in trade. It would be impossible to have a bona fide intention to use a mark for goods which are legally prohibited. This means that even if an application slipped through examination and was granted registration, the trade mark rights could be legally invalid and unenforceable.
As the European Union Agency responsible for the registration of intellectual property rights, the EUIPO grants pan-EU rights, effective in all Member States. The EUIPO does not typically wade into debates on national criminal matters, such as the legality of cannabis products. However they can be somewhat unpredictable.
Commercial-scale recreational cannabis is illegal in all EU member states. In some such as the Netherlands, prohibition is not enforced, whilst in others such as in Spain and Belgium, small scale private cannabis growth and consumption can be permitted.
The EUIPO has been known to register EUTM applications which cover cannabis products without explicit restriction to those goods with higher psychoactive content. However applications have also been refused where marks are considered to be “quite highly suggestive of an illegal activity”. This is inspired by common trade mark assessments on the relevant consumer and their country of origin, based on the language of examination. The EUIPO then take into account the criminality of cannabis goods for that consumer.
Applicants should be prepared for above-average levels of scrutiny for cannabis related applications – although noting that “legal and common use of cannabis” potentially includes goods and services like skin care preparations, food, beverage and nutritional supplements containing cannabis derivatives, hemp or cannabis seeds and live cannabis plants, and smoking articles. There are of course a host of supplementary services relating to cannabis which may be permitted, and careful drafting of specifications can assist.
The EUIPO grants EUTM rights across all Member States, which included the UK until January 2021. Any rights which are granted by the EUIPO before the 1 January 2021 were automatically cloned to UK comparable rights, without examination. There is an underlying question on whether an EUTM which covers cannabis products and granted before 1 January 2021, and then automatically cloned to a UK comparable right without examination, would still be valid.
Brand owners: Using the System to your Advantage
The commercialisation of cannabis products often involves more than just the plants. Goods such as vaping equipment, which would be used for any kind of dried herbs for smoking purposes, may be registerable without specificity in the UK and EU. This is in contradiction to the USPTO practices, which may require an indication of what is to be vaporised.
Practically, this means in the UK and EU, rights could be obtained for similar and related goods which would not be obtainable in the US. Important consideration should be given to whether the application for surrounding products gives sufficient protection to the holder’s short and medium term commercial strategy. Of course, any implication that the goods are used for illegal activities may invite scrutiny, and any government level body will be sensitive to the perception of commercializing potentially criminalized trade.
As can be expected in such a fast moving area, there is a disconnect between the two trade mark systems across the Atlantic when applied to cannabis. Careful planning and strategies for trade mark applications is required, not only for the legality and use of the goods, but in ensuring any international filing strategy optimises the current and short term future legal issues in the countries of interest.
Please contact Ben Scarfield or your usual Kilburn & Strode advisor for more information.