Understanding the Recent Stanley Brother’s Trademark Denial

In June 2020, the Trademark Trial and Appeal Board (“TTAB”) issued an opinion denying Stanley Brothers Social Enterprises, LLC (“Stanley Bros.”) a trademark for the mark “CW,” which Stanley Bros. places on the packaging of a CBD-infused dietary supplement they produce. Here is what you need to know about the decision.

Why did TTAB deny Stanley Bros. the CW trademark and why is this significant?

The Stanley Bros. application to register “CW” as a trademark with the United States Patent and Trademark Office (“USPTO”) was initially denied because the examining attorney determined that the product, which contains hemp-derived CBD, violates the Food, Drug & Cosmetics Act (FDCA) and the Controlled Substances Act (CSA), both of which regulate products of the cannabis plant. As a reminder, “hemp” is defined generally as any part of the cannabis plant that contains less than 0.3% THC on a dry weight basis.

TTAB’s opinion, which reviewed the initial decision to deny the Stanley Bros.’ trademark, turned on whether the sale of the Charlotte’s Web product was federally illegal. Trademark registration is refused to the mark of any product whose sale is in violation of federal law. The Stanley Bros. argued that their sale of the product was legal on several theories: that it was authorized not only by Colorado State law, but also by the provision of the Agricultural Act of 2014 that authorizes the growth of hemp in some cases; that the FDCA does not regulate the CW product because it is a “dietary supplement” and not a food, and that the CW product falls under an exception to the FDCA allowing the sale for products “marketed in food” but not yet subject to clinical investigation.

TTAB rejected the first argument because Colorado law is irrelevant to whether an act is federally illegal, and because the Agricultural Act of 2014 authorizes the growth, but not the sale, of hemp. TTAB rejected the second argument because it construes the FDCA to include dietary supplements in its definition of “food,” making them an inclusion rather than an exception. TTAB rejected the final argument because the Stanley Bros. produced no evidence that CBD had not yet undergone clinical testing. (CBD has been approved as a drug, Epidiolex, and had undergone clinical testing in that approval process).

TTAB concluded that the sale of dietary supplements which contain CBD violates the FDCA and, therefore, the Stanley Bros. may not register their CW trademark. As cannabis companies have been established and growing over the past few years, many cannabis companies – both marijuana and hemp – have sought federal trademark protection for their brands in classes other than a mark directly protecting their product (for example, a trademark for CW may have been approve if they sought to use the mark on clothing as advertising or in relation to providing services such as education and entertainment), many of which have been approved by the USPTO. However, this decision sets the precedent that hemp-derived dietary supplements cannot receive federal trademark protection because, as the FDCA and related FDA regulations are currently drafted, they are considered illegal under federal law.

In addition to representing marijuana and hemp businesses in Florida and Colorado since 2015, Cannabis Business Attorney Rachael Ardanuy has closely followed the policy advancements at state and federal levels when it comes to cannabis, and has taught multiple seminars on the topic, including on Farm Bill of 2018 that legalized hemp cultivation and its implementation. She agrees that, due to FDA’s failure to address and regulate hemp and hemp-derived products since the legalization of hemp cultivation, mass confusion and illogical consequences have resulted.

What’s the bottom line? How/where can I trademark my hemp-derived CBD products?

State and local laws are continuing to evolve on this topic, so it’s definitely a moving target when looking across the United States for legal markets to sell in, and further, how and where to protect hemp-derived CBD brands. Currently, Colorado and Florida both authorize the growth and sale of hemp and hemp-derived products. At the Federal level, though, the sale of food or dietary supplements containing THC or CBD is prohibited by the FDA. You can read more about those prohibitions here. The FDA’s prohibitions mean that, under the Stanley Bros. decision, federal trademarks are unavailable to products containing hemp-derived CBD that are sold in interstate commerce, and the Stanley Bros. ruling could possibly even prevent companies that are only selling within the borders of their state from obtaining federal trademark protections for their branded projects, even though the sale of these products may be legal within their state boundaries. Despite this, the growth of hemp is authorized federally under limited circumstances, so it is possible that hemp cultivators may be able to obtain trademarks for their product, but only if they do not introduce them to the market. Finally, many states allow state0level trademark protections, which can protect the brand holder from infringement within their state of commerce.

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