I’ve written extensively about trademark litigation matters involving cannabis brands, but up until now, the trend in these lawsuits has been well-known non-cannabis companies suing cannabis companies. To read more about these cases, see the following posts:
But a new type of cannabis trademark litigation is starting to crop up, with cannabis companies suing each other for trademark infringement. This type of litigation will be extremely illuminating because until now, many theories upon which cannabis businesses have relied to acquire trademark protection have not been formally tested. We do not yet know how courts will treat the purported trademark rights owned by cannabis businesses, but the ongoing litigation between Harvest Dispensaries Cultivation & Production Facilities, LLC, based out of Arizona (I’ll refer to them as “Harvest of Arizona”), and Harvest on Geary, Inc. / Harvest Off Mission, Inc., based here in San Francisco (I’ll refer to them as “Harvest of California”), could provide us with some guiding case law.
The lawsuit has multiple facets, but to summarize, in 2017 Harvest of Arizona sued Harvest of California in Arizona alleging that Harvest of California stole the HARVEST name and logo. This lawsuit alleged trademark infringement, intentional interference with contract and with business relations, conversion, unfair competition and misappropriation of trade secrets, fraud, violation of Arizona’s Racketeering Act, violation of Arizona’s Consumer Fraud Act and unjust enrichment. In its complaint, Harvest of Arizona, which was established in 2011 and began using the HARVEST mark in 2012, claimed to own retail dispensaries and cultivation/production facilities in Arizona, Nevada, Illinois, Maryland, California, Massachusetts, Michigan, and Florida. It had no presence in California.
Fast forward to 2018, when Harvest of Arizona announced its plans to expand into California. At this point, Harvest of California, which owns California state trademarks for the HARVEST name, sued Harvest of Arizona in California Superior Court for trademark infringement and unfair competition in California. Harvest of California notes in its complaint that this is a simple case of trademark infringement but that because the parties are in the cannabis industry, only state law applies. Federal trademark law is not applicable.
These cases are illustrative of just how complex the issue of trademark protection in the cannabis industry really is. The fact that cannabis is regulated on a state-by-state basis, with operators legally unable to place their cannabis products into the stream of interstate commerce, creates what I like to think of as “silos” of trademark protection. Cannabis businesses can only obtain trademark protection for their cannabis goods and services in the states in which they legally operate. So, in theory, it is possible for a company to have lawful rights to a trademark in one state, but infringe on another party’s mark by moving their brand into another state.
And that could very well turn out to be the case for the two Harvest entities. Although Harvest of Arizona allegedly used the HARVEST mark first, they only used the mark in Arizona, and perhaps a couple of other states, but not California. Harvest of California claims to have made first use of the HARVEST mark for cannabis retail services in California, and priority for trademark rights depends on a party’s date of first use in the state in which they are claiming those rights.
It is also important to accurately state your date of first use on your trademark filing, so as not to raise allegations that your trademark was obtained improperly. It’s critical to understand your state’s trademark law as well as the requirements for trademark protection so that your state trademark registration is actually worth something. Typically, state trademark applications do not undergo a great deal of scrutiny and it is common for trademark registrations to issue improperly. Those registrations will not stand up in litigation.
For some additional reading on the topic of how to choose an enforceable brand that won’t get you sued, see the following: