TTAB (Still) Cites the Controlled Substances Act (CSA) in Rejecting Cannabis Trademarks

TTAB (Still) Cites the Controlled Substances Act (CSA) in Rejecting Cannabis Trademarks

The Trademark Trial and Appeal Board (the TTAB or Board) continues to refuse to register cannabis related trademarks, despite the growing legalization and use of cannabis at the state level.   In In re National Concessions Group, Inc., the TTAB refused to register trademarks for cannabis paraphernalia used for “dabbing.” In its refusal, the TTAB noted that the use of cannabis was unlawful under the Controlled Substances Act (CSA) and that, as such, trademarks for cannabis or related uses are not permitted. In so ruling, the TTAB rejected National Concessions Group, Inc.’s argument that, because the goods were legal under Colorado state law, that the goods were exempted under the CSA. 

Application for BAKKED Mark

National Concessions Group, Inc. (National Concessions) sought registration for marks BAKKED (in standard characters) and a stylized drop design mark, both for “essential oil dispenser, sold empty, for domestic use,” in International Class 21. The trademark office Examining Attorney refused registration of the marks because the identified goods were related to the sale of unlawful drug paraphernalia under the CSA, which prohibits the sale of such items in commerce under Sections 1 and 45 of the Trademark Act.

The Trademark Act states that a mark may not be registered unless it is “used in commerce.” As the Examiner noted, the Board has consistently interpreted this requirement to mean that the use of a mark in commerce must be ‘lawful’” under federal law.  The fact that both marijuana and cannabis remain illegal under federal law, businesses seeking federal trademark registration for cannabis-based products have faced significant hurdles. 

Businesses seeking to protect marks used in connection with cannabis paraphernalia face similar hurdles. Under Section 863(a) of the CSA, it is unlawful to (1) sell or offer for sale, (2) use the mails or any other facility of interstate commerce to transport, or (3) import or export drug paraphernalia. Drug paraphernalia is defined under Section 863(d) as “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under [the CSA].”

In contesting the trademark refusal, National Concessions raised two exceptions set forth in Section 863(f), which states that Section 863(d) shall not apply to: 

1. any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items; or
2. any item that, in the normal lawful course of business, is imported, exported, transported, or sold through the mail or by any other means, and traditionally intended for use with tobacco products, including any pipe, paper, or accessory.

The Examining Attorney ultimately concluded that National Concessions’ essential oil dispenser was illegal drug paraphernalia pursuant to § 863(d) of the CSA because its primary intended purpose was to dispense premeasured amounts of cannabis-based oil to a vaping or smoking device for “dabbing.” The Examiner further determined CSA exceptions did not apply.

TTAB Establishes New Cannabis Precedent

The TTAB unanimously upheld the U.S. Patent and Trademark Office’s (USPTO) trademark refusal. “Applicant cannot obtain federal registrations of its marks because Applicant’s identified goods constitute drug paraphernalia under the CSA, the exemption in Section 863(f)(1) asserted by Applicant, based on state law, does not support federal registration, and the exemption in Section 863(f)(2) does not apply,” the Board concluded.

In refusing registration, the TTAB agreed with the Trademark Examiner who concluded that the goods were primarily intended to be used for the dabbing of cannabis products rather than dispensing essential oils, despite National Concessions’ assertions in its application. 

As the TTAB acknowledged, the product was not unlawful as identified in the application. However, if the identification of goods or services in an application does not reveal a per se violation of the CSA, extrinsic evidence may still be used to show such a violation.  In this case, the Board pointed to the applicant’s BAKKED.COM products webpage and third-party websites that promoted National Concession’s essential oil dispenser as a “dabbing” tool, including advertising its “Dabaratus” as “AMONG THE BEST DAB TOOLS ON THE MARKET” that delivers “THE PERFECT DOSE OF CANNABIS EXTRACT.”

According to TTAB, the evidence demonstrated that the goods sold in connection with the mark were clearly drug paraphernalia. As explained in its decision:

This evidence amply supports a finding that Applicant’s identified “essential oil dispenser, sold empty, for domestic use,” which is sold by the “Largest Cannabis Company in the US,” primarily is intended or designed for use in connection with preparing, inhaling or introducing marijuana into the human body via “dabbing.” The consistent references in the evidence to the “pre-filled” version of Applicant’s goods provides further support for this finding. Indeed, there is no evidence to support a finding that Applicant’s goods are primarily intended or designed for any use other than as a “dabbing” tool. The identified goods therefore comprise prohibited drug paraphernalia, as defined in Section 863(d) of the CSA.

The TTAB then addressed National Concessions’ argument that it was protected under Section 863(f)(1), which states that that a “person authorized by… state… law to manufacture, possess or distribute” goods is exempt from the CSA’s prohibitions of drug paraphernalia.  While the Board acknowledged it was a matter of first impression, it never reached the merits of the argument. Instead, the Board determined that, even if National Concession’s interpretation of Section 863(f)(1) was accurate, it would still not be entitled to registration because the rights it seeks are not limited to Colorado.

“The Section (f)(1) exemption argued for here is tied to a geographic area— that is, Applicant argues it is authorized by Colorado law to manufacture, possess or distribute the goods in Colorado,” the TTAB explained. “But that exemption is insufficient to support the federal trademark registration Applicant seeks, which would be nationwide in effect.”

The TTAB also rejected National Concessions’ reliance on Section 863(f)(2), which exempts goods that “are of the type traditionally intended for use with tobacco products.” According to the Board, it’s limited evidence regarding tobacco oils being used for medicinal purposes failed to demonstrate that “essential oil dispensers, sold empty, for domestic use” have “traditionally” been used for tobacco based oils or substances. According to the Board, “[N]othing in the record supports a finding that Applicant uses its marks on anything other than an apparatus used to dispense cannabis-based oils for vaping through the process of ‘dabbing.’”

Key Takeaways for Cannabis Businesses

The TTAB’s precedential decision will arguably make it increasingly difficult to obtain federal trademark protection relating to goods that could be considered cannabis paraphernalia. While some registrations may have previously been approved based on rather unclear guidance from the TTAB, the TTAB’s latest decision gives trademark examiners greater authority to inquire into the actual use of the listed products and other extrinsic evidence, regardless of the statements made by applicants in their trademark applications. 

With attorneys experienced in both intellectual property and cannabis law, Scarinci Hollenbeck is uniquely positioned to help cannabis businesses protect their legal rights in a challenging and ever evolving legal landscape. We encourage businesses to reach out with any questions about the TTAB’s latest decision.