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Trademark Squatting: Not a Lucrative Business Proposition in the Cannabis Industry

trademark squatting cannabis

During one of my recent sessions perusing current news related to cannabis legal issues, I came across a press release that I think warrants a bit of discussion. I’m always wary of self-promoting press releases, but they can provide some good entertainment and, in this case, blog fodder. The particular press release that will provide us with the lessons to be learned from this post is titled “Any such use of the CBD Nation name in the marketplace is unauthorized and is considered Trademark Infringement.” You can read the full release here if you have some time to kill.

The gist of this press release is that the releaser, a San Diego-based company called GoGoPay LLC, owns a registered trademark for CBD NATION (more on that later), claims that any use of the mark “in the marketplace” constitutes trademark infringement (more on that later, too), is putting others on blast for using the mark in a way they allege infringes their rights, and is announcing that both the domain name AND the registered trademark are up for sale. There are a lot of trademark lessons to be learned here, and I’ll try to break them down.

First, what does this company actually own? They own a federal trademark registration for the mark CBD NATION (Reg. No. 5312245) that covers the following services:

Providing on-line computer databases and on-line searchable databases in the fields of medical information including medical testimony and preventative care information.

Note that the scope of a trademark is only as broad as the goods and services specified in the application. This registration does not specify any goods or services related to CBD, meaning that if a company started a line of CBD edible products called “CBD Nation” (not a particularly strong trademark), it would not infringe on the registered CBD NATION mark at issue.

So, how did GoGoPay get this registration and what services does the company actually provide? Well, they submitted (pursuant to an office action claiming they had not submitted a specimen sufficient to show use in commerce of the mark) a specimen showing the CBD NATION mark in use via a screen capture of a website. That website screen capture showed a site where people could “Search Hundreds of Medical Information Services Simultaneously.” However, when I tried to access the URL shown in the specimen, I got a 404 – PAGE NOT FOUND alert indicating that the page did not exist. The home page just shows a logo and a recitation of the services covered by the trademark registration. In addition to the limited scope of services specified in the trademark application, I would say that this registration is wide open to a challenge in the form of a petition to cancel for non-use. As we all know, lawful use in commerce is one of the fundamental requirements for obtaining a U.S. federal trademark registration.

Okay, so they got a trademark registration for CBD NATION that covers some limited computer database services, despite what appears to be a lack of use in commerce. Setting aside the use in commerce issue, what about their claim that the domain name and the CBD NATION trademark registration are up for sale? While the sale of domain names is possible (subject to the Anticybersquatting Consumer Protection Act, or the ACPA, which prohibits the registering, trafficking in, or using of an Internet domain name in bad faith with the intent to profit from the goodwill of a trademark belonging to another party), the sale of a trademark without its associated goodwill is deemed an “assignment in gross” and is invalid.

Backing up a bit, it’s helpful to think of trademarks as a bundle of property rights, which includes the goodwill associated with the brand. A trademark is not a property right that can be separated from this goodwill. How does one acquire goodwill in a brand? Through use. Without use in commerce, there can be no trademark registration, no trademark rights, and therefore no goodwill.

It follows that a “sale” of a trademark that does not include any goodwill would be invalid – the purchaser would acquire no trademark rights. The prohibition on assignments in gross of trademark rights stems from broader concepts of unfair competition. It goes against public policy for individuals to become “trademark squatters,” obtaining registrations for desirable brand names and then trading in the brand names for profit, which is exactly what this GoGoPay company appears to be attempting.

The moral of this blog post? First, always be skeptical of self-promoting press releases. Second, and most importantly, be very wary of companies that are selling domain names together with “trademark rights” without actually having a viable business to back up the brand, and don’t attempt to do this yourself. We’ve seen countless attempts at trademark squatting both in and out of the cannabis industry (look into the folks trying to lock down alternative names for the Washington Redskins), and we would never advise our clients to engage with these opportunists, or to view this type of “business” as a viable or ethical opportunity.

The post Trademark Squatting: Not a Lucrative Business Proposition in the Cannabis Industry appeared first on Harris Bricken.

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