It’s a trap!
Viva R. Moffat 22, Professor of Law and Co-Director of the Intellectual Property and Technology Law Program at the University of Denver Sturm College of Law; Sam Kamin, Chauncey G. Wilson Memorial Research Chair and Professor of Law at the University of Denver Sturm College of Law; Tim Maffett, JD from University of Denver Sturm College of Law, Law Clerk to Supreme Court, May 2022, “Cannabis, Consumers, and the Trademark Laundering Trap,” William & Mary Law Review, 63(6), pp. 1984-1986, Lexis, kav
To see why, assume for a moment an alternate universe in which Ventures has a registered trademark for the WOODSTOCK mark in connection with music festivals and that Roots has been using the WOODSTOCK mark for approximately twenty-five years in connection with a radio station. In this counterfactual story, Roots does not seek federal registration of its mark, but they do begin selling smokers' articles as well as marijuana when it is legalized for recreational purposes in New York. Well after Roots begins selling marijuana, Ventures decides that they wish to move into the cannabis space as well. Under this version of the story, Roots has a valid, though unregistered, trademark in WOODSTOCK in connection with marijuana and smokers' articles, 232and it is the senior user of the mark in that context. So, when Roots sues Ventures for trademark infringement, a court could easily conclude Roots owns [*1985] the mark for use in connection with smokers' articles (and possibly marijuana, though the lawful use doctrine may still be invoked here to deprive Roots of trademark rights in connection with marijuana itself). 233Roots will assert that Ventures' sale of marijuana under the WOODSTOCK mark is likely to cause confusion with Roots' rights in connection with smokers' articles.
This is where the outcome diverges from the real-world dispute. In this alternate story, because Roots has not sought any form of federal trademark protection - and they have not laundered their trademark - they have not been required to file a disclaimer indicating that they are not seeking registration for use of the mark in connection with marijuana. In this scenario, Roots would be able to point to the proximity of the goods and to indicate that they have expanded into marijuana sales or that they plan to do so when the federal prohibition is lifted. In this alternative universe, there would be no statement to the contrary in PTO records that the court could use against Roots. Roots would not have submitted any documents to the PTO from which a court could conclude that their goods were "not intended for use with recreational marijuana." 234This alternate-universe Roots would thus be much more likely to prevail on a likelihood of confusion argument than the actual Roots was. It seems quite logical that a company selling smokers' articles and vaping devices, even if only for tobacco, would be likely to expand into marijuana sales (certainly more likely than an entertainment company that puts on music festivals).
3. Consequences for Consumers and a Way out for Courts
Having walked through this alternate scenario, it becomes clear that the "trap" for cannabis companies is also a trap for consumers and for the consumer protection and fair competition goals of the trademark system. If, in fact, Roots was the first user of the WOODSTOCK mark for marijuana and marijuana-related items, it is quite possible that consumers in the area of Woodstock, New [*1986] York, and maybe even farther afield, will be confused if Ventures begins using the same mark in connection with marijuana sales. In other words, if the WOODSTOCK mark has become associated in marijuana consumers' minds with Roots, there will be confusion in the marketplace if Ventures is permitted to use the very same mark on the same or closely related goods. 235
[Footnote 235 Begins]
Professor Mikos again predicts exactly this result. See Mikos, supra note , at 168 ("By making it more difficult for firms to protect their marks from infringement, the lawful use requirement enables rivals to engage in predatory practices that not only rob mark owners of the goodwill they have imbued in their marks, but also deceive consumers. For example, because of the requirement, nothing currently prevents a cannabis firm in one state from stealing the brand name of an out-of-state rival and using that name to hawk its own cannabis products. As a result, consumers may not realize that the cannabis they see in stores in different states is not necessarily the same, even if it bears the identical mark.").
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