Trademarks, free speech and cannabis

2017 IN REVIEW

In 2017, the U.S. Supreme Court ruled for the first time that the First Amendment precluded the U.S. Patent and Trademark Office from refusing registration to marks that disparage on the basis of race and, presumably, religion. The decision -- involving a rock band, The Slants -- was widely publicized. The court held that the band could not be denied a federal registration for THE SLANTS on the basis that the mark was disparaging to Asians. Matal v. Tam, 137 S. Ct. 1744 (2017). Just last week, on Friday, the U.S. Court of Appeals for the Federal Circuit extended this reasoning to find the applicable statute, 15 U.S.C. Section 1052(a), equally unconstitutional as a basis to refuse registration to "immoral" or "scandalous" marks that would otherwise qualify for registration.

This year we also saw the Patent and Trademark Office steadfastly continuing to deny registrations for cannabis-related trademarks -- California will begin issuing licenses for the sale of cannabis for recreational use on Jan. 1 -- as well as developments regarding genericism of marks, trade dress, abandonment of marks, and a new electronic-filing requirement.

First Amendment

Must the Patent Office now register the "N-word," spelled out, for goods and services, assuming all other registration requirements are met? Yes. Must it now register the "F" word, spelled out, for goods and services, assuming all other registration requirements are met? Yes.

The prohibition against federal registration of immoral or scandalous marks was not before the Supreme Court in The Slants case. That issue was just decided in In re Brunetti, 2015-1109 (Fed. Cir.), where the Federal Circuit found it unconstitutional for the Patent Office to deny registration to a FUCT mark for apparel that otherwise qualified for registration. The misspelling was irrelevant. The decision would have been the same had the "F-word" mark been spelled out in the usual way. The Federal Circuit determined the improper message-suppression the Supreme Court found in The Slants case also appeared in the FUCT case.

While few trademark registration cases receive the media attention of The Slants or FUCT, many will nonetheless affect registration rights impacting less-exciting trademarks, including marks of extreme value. It is not necessary to have a registration in order to enforce a trademark under the Lanham Act in federal court, but registration can be of considerable value nonetheless.

It is key to remember that in the U.S., trademark registration does not itself create the trademark. One doesn't "trademark a name" by filing anything with the government. Trademark rights come from actual use of a mark in connection with the lawful sale of specific goods and services. Unlike other places, a company or individual can't obtain a trademark registration unless and until there is already a trademark to register. One can apply for a trademark on the basis of an intent to use the mark at a future time -- but that registration will not issue unless satisfactory and timely evidence of use is supplied to the Patent Office.

Think of the trademark as a person, and the trademark registration as a birth certificate. The birth certificate doesn't create the person! The person must exist in order for a birth certificate to issue. A birth certificate contains valuable evidentiary presumptions about the person. And a registration does the same for a trademark, and more.

Cannabis

For now, the Trademark Trial and Appeal Board, known as the TTAB, must continue to refuse registration to trademarks for cannabis and cannabis paraphernalia, as it did in In re PharmaCann LLC, 123 U.S.P.Q.2d 1122 (TTAB 2017). To establish trademark rights, there must be use of the mark in commerce. The Lanham Act defines "commerce" as "all commerce that Congress may lawfully regulate." Although many states have legalized the sale of cannabis, federal law has not. There is no federal regulation of commerce pertaining to the sale of cannabis goods and services -- except to prohibit it. Dispensing cannabis remains illegal under federal law. That is the barrier to trademark registration for marks for these goods and services.

Counsel for applicants seeking federal registration for cannabis brands urge the Patent Office to consider that the Department of Justice, in its 2009 Cole Memorandum, announced it wouldn't prosecute medical cannabis sale in states where such sales are legal. But the TTAB says the Cole memo, by its own terms, provides no defense to violations of federal law. Thus, the Patent Office has repeatedly rejected the Cole memo as a basis to support registration of cannabis-related marks.

Another frequently raised argument is that Congress has, in several appropriations bills, prohibited the DOJ from expending funds to prevent states that have legalized medical cannabis from implementing their own state laws permitting cannabis activities. The TTAB has shot down this argument because, "Congress could change its mind tomorrow."

Genericism

Genericism was a hot TTAB topic in 2017. In one case, on appeal, the TTAB found the mark PRETZEL CRISPS generic for "pretzel crackers." If a mark is generic, it is available to all, including competitors like applicant/registrant here. Finding genericism is a two-part process. First, the genus is identified. In this case, the parties to the TTAB proceeding agreed that the category of goods was "pretzel crackers." The next step is to assess whether the relevant public understands the term primarily to refer to that genus. The TTAB pointed to the defendant's own marketing strategies as contributing to the relevant public's understanding of PRETZEL CRISPS as a type of product and not a brand for the product. Frito-Lay North America, Inc. v. Princeton Vanguard, LLC, 124 U.S.P.Q. 2d 1184 (TTAB 2017).

Another type of genericism involves the situation where one has created a new genus of goods by being the first (and possibly only) seller of the new product. The TTAB declared "COFFEE FLOUR" generic for an unprecedented product the applicant itself identified generically in its marketing materials as "coffee flour." Had the applicant come up with a generic name to identify the product and only used COFFEE FLOUR as the brand for that product, it might have avoided killing its own mark. In re Empire Tech. Dev. LLC, 123 U.S.P.Q. 2d 1544 (TTAB 2017).

Trade Dress

This year saw a number of high-stakes product configuration (trade dress) registration cases. Among them was a refusal to register the color yellow appearing on General Mills' cereal boxes, claimed as a brand for applicant's "toroidal-shaped, oat based breakfast cereal." (Think Cheerios.) The record showed long-standing extensive third-party uses of yellow cereal boxes, including for oat cereal. Since applicant didn't have "substantially exclusive" use of yellow on cereal boxes, the mark was unregistrable, as the TTAB found in In re General Mills IP Holdings II, LLC, 124 U.S.P.Q. 2d 1016 (TTAB 2017).

Abandonment

Abandonment played a part in two precedential TTAB cases in 2017. When a mark is abandoned, it is available for competitors to use (registered or not). Non-use of three years provides a rebuttable presumption of abandonment when coupled with an objective intent not to resume use. A subjective desire to resume use is worthless, as several parties found this year in the registration context. Azeka Building Corp. v. Byran Kenji Azeka, 122 U.S.P.Q. 2d 1477 (TTAB 2017); Coach Builders, Inc. v. SPV Coach Company, Inc., 123 U.S.P.Q.2d 1175 (TTAB 2017)

Electronic Filing

Finally, the TTAB rules changed January 2017, causing some lawyers grief. All submissions must be filed electronically; there is an elaborate and time-sensitive petitioning procedure if they cannot be. Direct testimony may now be introduced by declaration but if live cross-examination is desired, the declarant is deposed "where the witness is found." Telephone depositions (absent from the Rules) are permitted. By paying scrupulous attention to rules governing the introduction and exclusion of evidence, practitioners will dodge some recurrent difficulties under the remaining old rules and the new ones.