Cannabis Branding – Part 1: What Cannabis Companies Need to Know about Securing Trademarks in Canada

Article by Lexology

Cannabis Branding - Part 1: What Cannabis Companies Need to Know about Securing Trademarks in Canada

Since the legalization of recreational cannabis in Canada in October of 2018, there has been a surge of trademark applications filed in connection with cannabis-related goods and services. At the time of writing, there are more than 7,000 such active trademark applications and registrations in Canada.

In the increasingly crowded cannabis market, it is critical for businesses to adopt distinctive branding and to protect and enforce their intellectual property rights. However, the regulatory regime governing the cannabis sector in Canada creates some unique complications and restrictions on the branding and marketing of cannabis products and services.  In this series of articles, we will explore the opportunities and challenges facing brand owners in the cannabis space, including the intersection of the Cannabis Act and the Trademarks Act. In this article, we will focus on key considerations for cannabis companies when adopting new marks, as well as unique opportunities presented by the Canadian system.

Opportunities

Canadian Trademark Registrations Can Expressly Cover Cannabis

Unlike some other jurisdictions, Canadian trademark registrations can expressly cover cannabis in the list of goods and services. In fact, the Canadian Intellectual Property Office’s (“CIPO”) Goods and Services Manual includes entries such as “cannabis cigarettes”, “cannabis for smoking”, “cannabis oil for food” and “dried cannabis”, among others.

Companies based in the United States or other jurisdictions where there are prohibitions, or onerous restrictions, on registering marks in association with marijuana or other cannabis-related goods and services, may wish to secure their trademark rights in Canada, particularly since Canada has become one of the world’s leading centres of cannabis technology and production. As of June 2019, the process became more straightforward as applicants are no longer required to establish use of a trademark in order to secure a Canadian registration.

Non-Traditional Trademarks

Canada now accepts applications for a wide variety of “non-traditional” trademarks, including colour, three-dimensional marks, positioning of a sign, holograms, motions, sounds, tastes, scents, textures, and a mode of packaging goods. Certain categories, such as taste and scent trademarks, present unique opportunities for producers to carve out monopolies for distinctive cannabis products. That being said, most categories of non-traditional marks are generally considered not “inherently distinctive”. As such, applicants will have to file evidence to establish the acquired distinctiveness of such marks through use before a registration will be granted.

To date, the vast majority of applications for non-traditional marks have been filed incorrectly, primarily due to the fact that self-represented applicants have filed a large percentage of these applications and have often misunderstood the process. Nevertheless, as noted above, the availability of protection for non-traditional marks represents an enormous opportunity to protect distinctive attributes of cannabis products such as their scent, taste, and texture.  It should also be noted, however, that non-traditional marks are subject to the restrictions set out in the Cannabis Act and Cannabis Regulations, which are discussed further below.

Considerations for Adopting a New Mark

Descriptiveness and Confusion

In the competitive cannabis market, it is critical for businesses to adopt strong and enforceable trademarks. To that end, businesses should endeavour to adopt trademarks that are unique and distinctive.

One trend in the cannabis sector is for businesses to adopt marks which contain elements that describe, or suggest an association with, the goods and services being offered. Examples are trademarks that include terms such as “CBD”, “BUDS”, “LEAF” and “CANNA/CANNABIS” or logos that incorporate generic designs of cannabis leaves.

This strategy can be problematic for several reasons. First, trademarks that describe or suggest an association with the goods/services, or the character or quality of such goods/services, tend to be weak. Such marks are weak because they have low or limited capacity to distinguish the goods/services of the trademark owner from the goods/services of others. Second, if similar or identical trademarks are used by more than one business in the same sector, such marks will be weakened and, in some cases, may become unenforceable. Another factor to consider is that trademarks that consist of a “coined” or made-up word, tend to be stronger than trademarks that consist of common words or acronyms.

As more applications are filed for trademarks containing common elements like those outlined above, one of two outcomes is likely. One scenario is that the earliest-filed applications will carve out some degree of monopoly over the use of such elements and will block later-filed applications from proceeding to registration. Another scenario is that while the later-filed applications will not be blocked, all registrations containing these common elements will have low distinctiveness and the owners will be entitled to a very narrow scope of protection. In that case, it would be difficult to enforce one’s trademark rights against subsequent users who adopt similar marks.

Another interesting issue arises when businesses adopt cannabis strain names, nicknames, or slang terms as trademarks. Such marks are arguably descriptive of the goods/services and would suffer from the same weaknesses as those discussed above. However, if CIPO is not familiar with the strain names, nicknames, or slang terms, then the descriptiveness may not be apparent. As such, objections may be less common for such marks as compared to the descriptive/suggestive marks described above. That being said, if competitors are monitoring the trademarks database, they could oppose such applications on descriptiveness grounds.

Read the full article here.

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