Cultivating a Better Strain of Trademark Law: Why the Unlawful Uses Doctrine Should Be Modified for State-Legal Marijuana-Related Marks.

• Author: Crocker, Sam

1. INTRODUCTION 591 II. BACKGROUND 592 A. Overview of Marijuana Regulation in the United States 592 B. Trademarks and the Unlawful Uses Doctrine 594 1. Origins and Evolution of the Doctrine 594 2. Application to the Marijuana Industry 595 3. The Problems Arising from the UUD in the State-Legal 597 Marijuana Industry and Current Methods of Protection C. The Beneficial Uses Doctrine 599 1. Story-ed Origins and a Juicy Demise 599 2. Modern Applications and Marijuana-Related Patents 600 III. ANALYSIS 601 A. Comparing the Policy and Origins of the Beneficial Uses 601 and Unlawful Uses Doctrines B. 20th and 21st Century Changes in Societal Norms 602 C. Alternate Means of Meeting the Goals of the UUD and the 603 BUD D. Challenges and Controversy 603 IV. RECOMMENDATION 605 A. Recommendations for the Federal Courts 605 B. Recommendations for the USPTO 605 C. Recommendations for Marijuana-Related Mark Applicants 606 V. CONCLUSION 607 I. INTRODUCTION

   Within the last five years, numerous individual states legalized the recreational use of marijuana, leading to a booming quasi-legal industry for marijuana and marijuana-related products. (1) These products range from actual leaf cannabis, to cannabis-infused food products, to assorted accessory products like lighters and rolling papers. (2) This industry has been forced to adapt to a host of legal issues arising from its quasi-legal status, many of which arise within the intellectual property field. In particular, industry participants are unable to receive federal trademark protection for their branding efforts, due to the United States Patent and Trademark Office's (USPTO) adherence to the Unlawful Uses Doctrine (UUD). (3) This doctrine mandates that the statutory requirement that trademarks be used in commerce must be interpreted as lawful use for purposes of registration. (4) This doctrine has caused and continues to cause a host of problems for state-legal cannabis industry participants. (5)

   This Note argues that the Unlawful Uses Doctrine should be curtailed in the examination of trademarks related to the sale of cannabis and cannabis-related products, much as the Beneficial Uses Doctrine has been phased out in the examination of patents. This Note will first discuss the history of both doctrines, their current status, and how each has been applied to USPTO applications related to cannabis. The next Part will analyze the change in application of each doctrine and assess how the Unlawful Uses Doctrine could be limited in the review of cannabis marks. Finally, this Note will recommend that the federal courts and the USPTO adopt a qualified approach, permitting the registration and defense of cannabis trademarks in select situations based on compliance with state cannabis laws.

2. BACKGROUND

   This Part will first briefly examine the legal history and current status of marijuana in the United States. It will then explore the common-law origins of the Unlawful Uses Doctrine in trademark law, and how that doctrine interacts with cannabis. Third, this Part will trace the history and evolution of the Beneficial Uses Doctrine in patent law. Finally, it will address the ways in which the Unlawful Uses Doctrine has been applied to the state-legal marijuana industry and describe the problems that have resulted from that application.

   1. Overview of Marijuana Regulation in the United States

      Marijuana was first available in the United States in the early 1900s, and could be legally purchased in the form of "Indian Hemp" cigarettes. (6) Soon after, various states began placing restrictions on the substance. (7) In 1937, the federal government established a substantial nationwide tax on cannabis sales and production, and ultimately outlawed the substance in 1970 under the Controlled Substances Act (CSA). (8) Sections 812, 841, and 863 of this legislation explicitly made illegal the sale or use of the substance. (9)

      Marijuana remained fully illegal in all state jurisdictions until the California legislature passed the "Compassionate Use Act" in 1996. (10) This act made California the first state to legalize marijuana for medical purposes. (11) Numerous states have gone on to pass their own similar laws. (12) In 2012, Washington and Colorado became the first states to legalize cannabis for recreational purposes for adults ages 21 and over. (13) Since then, six other states have joined in legalizing recreational use for adults. (14) As of this writing, 29 states, Puerto Rico, Guam and the District of Columbia have legalized recreational or medical marijuana usage. (15) It is important to note here that the state-legal marijuana market has recently come into question. On January 4, 2018, Attorney General Jefferson Beauregard Sessions III rescinded the Obama-era Cole Memo, which directed U.S. attorneys in marijuana-legal states to deprioritize the prosecution of marijuana crimes. (16) This action by now former Attorney General Sessions, in theory, opens the door to federal enforcement of marijuana laws in state-legalized jurisdictions. However, public support for legalization remains high, (17) and several U.S. attorneys serving in relevant states have pushed back against now former A.G. Sessions' actions. (18) Furthermore, Session's replacement, William Barr, stated during his confirmation hearings that he did not intend to order the Justice Department to prosecute state-legal cannabis businesses. (19)

      This trend towards legalization has created a massive market for marijuana in the United States. Forbes Magazine reported that in the year 2016, the legal marijuana industry grew by 30% to reach a value of $6.7 billion dollars. (20) The legal cannabis industry is expected to reach a value of $21 billion in the year 2021. (21) Though estimates vary, this industry is comprised of 3300-4300 shops and medical dispensaries and up to 28,000 total businesses when including growers as well as businesses involved in the ancillary aspects of the industry. (22)

   2. Trademarks and the Unlawful Uses Doctrine

      This Subpart examines the Unlawful Uses Doctrine of trademark law through its history, evolution, and modern application. It also discusses the current application of the Unlawful Uses Doctrine to cannabis-related marks and describes the problems that its current application presents.

      1. Origins and Evolution of the Doctrine

         Trademarks serve a valuable function in the business realm, permitting customers to rapidly identify the source of products and make an informed purchase choice based on past experience. (23) The primary body of law encompassing trademarks is the Lanham Act passed pursuant to the Commerce Clause of the United States Constitution. (24) The Lanham Act protects any "word, name, [or] symbol" used to identify goods in commerce. (25) This protection comes in many forms, ranging from numerous advantages provided to registered marks (26) to numerous avenues for relief against anyone illicitly using claimed marks. (27)

         One of the requirements for registration is that the rights seeker must declare that the mark is being used in interstate commerce. (28) This use must be established at the time of filing (or soon after, if the applicant makes use of an intent-to-file application). (29) Over the years, the USPTO and the Trademark Trial and Appeal Board (TTAB) have added a qualifier to the use requirement, insisting that use means "lawful use." (30) The concept of use-in-commerce necessitating "lawful use" first arose in a TTAB case from 1959. (31) In that case, a shipment of "BLACK PANTHER"--labeled insecticide was shipped across state lines in violation of the Federal Economic Poisons Act. (32) The court said this was not use in commerce, and consequently cancelled the registration of the "BLACK PANTHER" mark. (33) The doctrine was again applied in 1962 in a TTAB decision entitled In re Taylor. (34) The applicant's mark "CHUCK-A-BURGER," used for his restaurant business was denied registration on account of illegal use, as some mark-bearing shipments of the beef were not in compliance with the Food, Drug and Cosmetics Act. (35)

         The Unlawful Uses Doctrine was formalized for the USPTO in 1965 in the Code of Federal Regulations:

         When the sale or transportation of any product for which registration of a trademark is sought is regulated under an Act of Congress, the Patent and Trademark Office may make appropriate inquiry as to compliance with such Act for the sole purpose of determining lawfulness of the commerce recited in the application. (36) This doctrine has not substantially changed since 1965.

         At the federal court level, the doctrine was most famously applied in a Ninth Circuit opinion, CreAgri v. USANA Health Services. (37) In that case, the Ninth Circuit held that marks used on dietary supplements not properly labeled in accordance with federal law were not enforceable. (38) While a large number of the cases involving the Unlawful Uses Doctrine since CreAgri have been in the Ninth Circuit, it has also been applied in federal courts in Michigan and New York. (39)

      2. Application to the Marijuana Industry

         The Unlawful Uses Doctrine has been frequently invoked in recent years to deny registration to the marks of marijuana-related businesses. (40) The USPTO's formal stance is that, given marijuana's status as a Schedule I drug under the Controlled Substances Act, any marks related to the sale of marijuana fail for lack of lawful use in commerce. (41) To date, no dispensary or retailer of marijuana has received protection on any of its marks, (42) and currently, nearly 600 marijuana-related mark applications sit in limbo in the USPTO offices. (43)

         Since the legalization of marijuana by various states, companies seeking protection on their cannabis marks have attempted to circumvent the Unlawful Uses Doctrine via the use of ancillary marks. (44) However, two recent TTAB decisions have likely eliminated that option. (45)

         In In re Morgan Brown, the TTAB restated the general rule for...