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Counterfeit Marijuana Products: The Legal and Practical Obstacles to Enforcement

September 26, 2019

By: Amanda Denton

Category: Arts, Innovation & Intellectual Property, Medical Marijuana

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With health scares related to marijuana vaping products in the headlines, some government officials are investigating to what extent counterfeits are a part of the problem. Unfortunately, in the area of marijuana-based goods, current federal trademark law offers a feeble solution.

For many marijuana-related businesses (“MRBs”) offering products and services that comply with state law but are illegal federally, federal trademark protection and enforcement are unavailable. That’s because federal trademark registration is permitted only in connection with goods and services that are lawful under federal law.

State trademark laws do generally protect the brands of goods sold legally within the relevant state. However, the lack of federal trademark protection limits the availability of federal courts, and makes civil trademark enforcement actions against counterfeits appearing out-of-state wholly unavailable.

Instead, companies that see their brands appear on unauthorized products in other parts of the country must rely on the limited resources of foreign-state and federal law enforcement authorities. Even where public resources are available, effective enforcement may still have to be confined to non-trademark violations. The situation is equally cumbersome for law enforcement authorities, who may be denied the kind of private sector support that can be crucial in more typical counterfeiting cases. In short, where federal trademarks are unavailable, MRBs have little if any control over any of the misleading labels resembling their brands that may appear in foreign states.

Not all marijuana-related goods and services are illegal under federal law, and consequently not all such goods and services are denied federal trademark protection. For example, brands for accessories with purposes that are federally lawful may be registered with the U.S. Patent and Trademark Office (“USPTO”).

The bar on federal trademark registration has further narrowed in scope following the 2018 Farm Bill, which amended the Agricultural Marketing Act and the Controlled Substances Act (“CSA”) to remove “hemp” from the CSA’s definition of marijuana as a controlled substance. In response, on May 2, 2019, the USPTO issued new guidance for examination of trademark applications, making it possible for manufacturers of hemp-derived (i.e., those products containing less than 0.3% of the psychoactive component THC) cannabidiol, or “CBD,” oil and other low-THC hemp products that are legalized at the state level to use the federal trademark system to establish nationwide rights.

In March 2019, Arkansas’ governor signed Act 504, legalizing at the state level any hemp-derived CBD that contains not more than 0.3% of THC, and which is not subject to U.S. FDA oversight as a medication. While Act 504 created no new state oversight regarding CBD labeling or advertising, it does open the door to federal protection of legitimate CBD products against counterfeiting.

For a more comprehensive examination of recent trends in marijuana-related trademark enforcement and details about the USPTO’s examination of related trademark applications, read my recently published article that appears in Summer Issue of The Arkansas Lawyer. 

Article republished with permission from The Arkansas Lawyer and the Arkansas Bar Association.

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