Orlando Trademark Lawyer: Hazy Protection for Marijuana Co. Trademarks

Mom-and-pop smoke shops, gas stations and specialty stores from Florida to California are finding themselves embroiled in federal trademark lawsuits over sales of seemingly ubiquitous glass water pipes, known also as bongs. Although headlines will be written tongue-in-cheek, our Orlando trademark lawyers must emphasize that small businesses should take all trademark infringement claims seriously.

One plausible legal defense in these cases could rest on the federal prohibition of marijuana and related drug paraphernalia. But while this may weaken some of these Florida trademark infringement claims, don’t discount the fact that pipe-making plaintiffs have had a measure of success, securing a few substantial pre-trial settlements and at least one default judgment in a federal court in Florida.

Sream, Inc. is the only American firm licensed by German manufacturer ROOR International BV to hawk its high-end water pipes in the U.S. Marketed as toker status symbols (referred to by some as “the Louis Vuitton of bongs,”) the pricey pipes have been the subject of dozens of claims against against Florida small businesses – including the one recently-named defendant gas station in Orlando. Defendants are accused of selling counterfeit water pipes featuring ROOR’s signature backwards “R” logo. The manufacturer and trademark-authorized seller are seeking millions in damages for alleged brand dilution and sales losses.

Imitators of the pipe products have reportedly exploded alongside rising market demand for legal marijuana, now available as medicine 23 states (including Florida) and for recreational use in 10 states. Although technically advertised and sold for facilitation of legal adult tobacco use, products made by Roor undeniably appealed to cannabis consumers. Some marketing was more a wink-and-nod to the marijuana industry, though arguably some was more blatant. This could be the primary weakness in the some pipe plaintiff claims. Still, that doesn’t mean defendants should expect a slam-dunk.

No Historical Protection for Pot Paraphernalia Companies

With the rapid growth of the U.S. marijuana market, now valued at roughly $8.5 billion annually, it’s unsurprising that commercial cannabis firms and ancillary businesses (like pipe manufacturers) are more boldly testing the waters of U.S. trademark law. Their success has been spotty, but it’s enough that small business owners selling these types of products should pay attention.

There is no dispute that federal trademark law protects only legally-regulated goods and services. Traditionally, marijuana and drug paraphernalia products were entirely-off-the-table, ineligible for registration due to U.S. Controlled Substances Act provisions – specifically 21 U.S. Code Section 863, which banned drug paraphernalia sales.

In 2010, the U.S. Patent and Trademark Office announced a new category of trademarks for “plant matter for medicinal purposes,” aka medical marijuana. Several firms scrambled to secure trademarks, but the opportunity was short-lived. The federal agency reversed course just a few months later, calling the unveiling of the new category a “mistake,” adding no marijuana product was legally eligible for trademark protection and it was “highly unlikely” it ever would be. Soon after, the USPTO began routinely requiring applicants to assert that the goods or services for which they sought trademark protection did not violate the U.S. Controlled Substances Act or involve services to marijuana businesses. This continues to put many state-legal marijuana businesses in a bind. It’s also why it’s critically important they consult with a business and intellectual property lawyer before ever making their first sale, let alone launching an ad campaign or seeking trademark protection.

Why Pot Pipe Trademark Claims Might Fail (But Could Prevail)

Despite the federal ban, the public and politicians have grown increasingly supportive of marijuana legalization in recent years. In turn, the hard line on cannabis company exclusion from trademark protection has gotten a bit hazier. Some companies have secured protection via federal laws pertaining to unfair competition or copyright (which have few restrictions on products or content protected) or some state laws.

As Orlando trademark defense attorneys can explain, a possible defense for accused counterfeiters could lie in the way plaintiffs marketed their smoking device products. Federal trademark law still firmly states that products violating federal law can’t be trademarked. That would include marijuana itself as well as drug paraphernalia used to consume it. To prevail in a trademark case like this, plaintiff pipe manufacturers would likely need to show they weren’t actively marketing their product to cannabis consumers. That could be tough if, like ROOR, their products received numerous prestigious accolades from marijuana trade publications like High Times magazine.

Trademark violation claims might nonetheless prevail if plaintiffs could downplay this aspect and establish clear product uses outside the context of cannabis (in this case, tobacco consumption).

Because federal law allows up to $15,000 per trademark violation, all trademark infringement lawsuits must be weighed on merit, carefully and individually by an experienced intellectual property lawyer.

The lack of clear trademark rights for marijuana businesses and ancillary companies has undoubtedly put them at a disadvantage, but some have still found ways around this. With the rapid pace of evolving state laws (and federal statutes almost sure to follow in the coming years), discussing your options with a dedicated Florida trademark lawyer is imperative.

Perhaps the worst thing a small business owner can do is ignore a trademark protection lawsuit, which can prove incredibly costly. Late last year, the U.S. District Court for the Southern District of Florida granted a default judgment of $50,000 for violations of the Lanham Act (prohibiting false designations of origin, false descriptions and product dilution) against a Florida small business defendant in one of these water pipe trademark infringement cases. The reason? The business failed to file any response at all to Sream’s lawsuit.

If you have a marijuana business in Florida or sell ancillary products here – especially if you’re on the receiving end of a formal complaint or cease-and-desist letter – contact our experienced Orlando intellectual property attorneys for a consultation on your case.

Contact Orlando trademark attorney at The Chidolue Law Firm, serving Orlando and Lake Mary, by calling (407) 995-6567 or email us.

Additional Resources:

Orlando gas station sold counterfeit bongs, lawsuit claims, Oct. 16, 2018, By Mike DeForest, ClickOrlando.com

More Blog Entries:

FLORIDA CRAFT BEER TRADEMARK REGISTRATION PREVENTS ORLANDO TRADEMARK LAWSUITS, Dec. 10, 2018, Orlando Trademark Defense Attorney Blog

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