Last month, my colleague Alison Malsbury reported on the trademark infringement lawsuit filed by Colorado-based Veritas Fine Cannabis (“VFC”) against Florida-based Veritas Farms. In her post covering the initiation of the lawsuit, Alison explains why the current legal landscape forces plaintiffs in such cases to rely on a two-part strategy of obtaining 1) state trademark registrations for cannabis product that usually don’t apply in the defendant’s state, and 2) federal trademark registrations that protect ancillary goods and services nationwide. VFC had also alleged that Veritas Farms’ cannabis goods fall within VFC’s “zone of natural expansion” – an argument that is quite common but not quite so successful. This week, Veritas Farms filed a Motion to Dismiss on this premise, arguing that VFC admitted in its own pleadings that it does not actually possess the common law federal trademarks it seeks to enforce.
As a refresher, in order to state a claim for trademark infringement under the Lanham Act, the plaintiff must show:
- The plaintiff has a protectable interest in the mark;
- The defendant has used “an identical or similar mark” in commerce; and
- The defendant’s use is likely to confuse consumers.
1-800 Contacts, Inc. v. Lens.com, Inc., 722 F.3d 1229, 1238 (10th Cir. 2013) (citations omitted). A similar showing is required to state a claim for unfair competition under the Lanham Act and state law unfair competition. Cleary Bldg. Corp. v. Dame, 674 F.Supp.2d 1257, 1269-70 (D. Colo. 2009).
The interesting argument here surrounds element 1 – whether VFC even has a protectable interest in its alleged common law trademarks. Here, Veritas Farms argues that VFC fails to state a claim because it only claims to own two unregistered common law trademarks (that cover the entire United States) for a “V Design Mark” and a “VERITAS” mark that “provide[s] information about cannabis and cannabis products.” However, Veritas Farms argues, the trademark use is:
- Incidental to the sale of VFC’s goods. This is a legitimate argument as “Providing general information or instructions as to the purpose and uses of applicant’s goods is merely incidental to the sale of goods, not a separate informational service,” and thus not eligible for trademark protection. Trademark Manual of Examining Procedure, October 2018 § 1301.01(b)(v).
- Not used in interstate commerce because VFC only conducts business in Colorado. This is where the “natural zone of expansion” argument may fall – because VFC argued that Veritas Farms’ CBD products are federally illegal, it cannot turn around rely on a legally prohibited expansion to support its claim of trademark infringement.
- On a website that is merely advertising material. This is also a legitimate argument – “[A] web page that merely provides information about the goods, but does not provide a means of ordering them, is viewed as promotional material, which is not acceptable to show trademark use on goods. … There must be a means of ordering the goods directly from the applicant’s web page, such as a telephone number for placing orders or an online ordering process. Trademark Manual of Examining Procedure, October 2018 § 904.03(i) (citations omitted).
Veritas Farms goes on to argue that VFC also generally fails to sufficiently allege elements 2 and 3. We’ll keep an eye on this docket and report back, because how the Court rules on Veritas Farm’s Motion to Dismiss will be another great indicator as to whether cannabis companies may actually be able to protect their intellectual property rights through these multi-faceted strategies.
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