Cannabis Branding - Part 1: What Cannabis Companies Need to Know about Securing Trademarks in Canada
November 30, 2020
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.
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.
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.
As noted above, complications can arise if similar or identical trademarks are used by more than one business in the same sector. The key question is whether the proposed trademark is confusingly similar to a pre-existing third-party trademark. When assessing third-party trademarks, it is advisable to conduct broad and comprehensive searches covering all categories of goods and services which may relate to one’s business. Third-party use of trademarks in connection with non-cannabis goods and services can nonetheless give rise to a likelihood of confusion. For example, a cannabis business may have plans to expand into cannabis-infused beverages or topical applications containing cannabis. In that case, third-party trademarks used in connection with non-cannabis beverages or non-cannabis ointments, creams and salves may be material. Given the complex nature of these issues, it is often advisable to retain a trademark agent or lawyer to conduct appropriate searches and advise on potential issues.
Restrictions in the Cannabis Act
The Cannabis Act and Cannabis Regulations impose restrictions on the types of trademarks that may be used in connection with cannabis and the way such marks may be displayed. While this topic will be discussed in more detail in our next article, by way of example, it is generally prohibited to promote cannabis, cannabis accessories or any service related to cannabis by, among other things, (i) doing so in a manner that could reasonably be believed to be appealing to young persons; or (ii) presenting it or any of its brand elements in a manner that associates it or the brand element with, or 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.
Businesses should consider the full scope of restrictions set out in the Cannabis Act and Cannabis Regulations when evaluating potential trademarks. That being said, the question of whether a particular mark is offside the restrictions is a contextual analysis which may not always be clear-cut. It remains to be seen whether the Federal Government or the courts will ultimately provide further guidance on how such restrictions will be applied and interpreted.
Interestingly, CIPO does not examine trademark applications for compliance with the Cannabis Act. As such, brand owners may secure registrations for trademarks which they are prohibited, by the Cannabis Act, from actually using.
In Part 2 of our Cannabis Branding series, we’ll look at the restrictions on the promotion of cannabis in Canada.
In a recent decision arising from an appeal of a decision of the Trademarks Opposition Board, the Federal Court commented on when a retailer can establish use of a trademark on goods when the retailer is not the “source” of the goods. Specifically, if a retailer simply affixes its own trademark to goods manufactured by a third party, does that constitute use of the retailer’s trademark in association with those goods.
Interlocutory injunctions in Canadian trademark cases are rare. The decision at first instance to grant a motion for an interlocutory injunction in a dispute related to the “Bombay Frankie” trademark therefore made headlines, at least in trademark circles, for two reasons. First, the fact that the injunction had been granted was in itself noteworthy. Second, many in the intellectual property bar were of the view that the decision misapplied certain fundamental principles of trademark law and therefore introduced uncertainty into the law.
Canada continues to make news (the wrong kind) when it comes to the slow pace of its examination of trademark applications. Despite repeated promises by the Canadian Intellectual Property Office (“CIPO”) to speed things up, the problem is only getting worse. However, there are some promising signs.