Re-reading the Eteros Technologies decision extends federal exemptions to solve the case.

To protect consumers, cannabis growers, and business owners and further the purposes of federal trademark law the Federal Circuit should do one of two things. Section A encourages the Federal Circuit to read the CSA exemption under 21 U.S.C. § 863(f)(1) as creating federal trademark eligibility for cannabis products.128 This proposal would have the Federal Circuit affirm the lawful use in commerce the CIT acknowledged in Eteros Technologies in the context of federal trademark law.129 Section B suggests that, in the alternative, the Federal Circuit should adopt a framework that would treat federal trademark applications for cannabis-related products like other federally illegal products that have limited and lawful indicated uses.

[*191]

A. 21 U.S.C. § 863(f)(1) as a Federally Recognized Lawful Use in Commerce

The Federal Circuit can further the goals of federal trademark law by extending the principle that exemptions for goods, services, or conduct effectively make them legal under federal law.130 To do so, the Federal Circuit should read the CIT's holding that "the repeal of a state law banning an activity gives those now free to conduct the activity in question the 'right or authority' to so act," as removing cannabis and cannabis-related goods and services from the scope of illegality for businesses operating in jurisdictions where cannabis is legal.131 Put simply, the now-federally recognized exemption establishes lawful use in commerce for businesses operating in states where cannabis is legal, and where these businesses intend to use their marks lawfully.132 Acknowledging this would eliminate the barriers to federal protection these businesses are currently facing.133

National Concessions Group, Inc. made this exact argument on appeal to TTAB in 2023 but lost.134 It is undisputed that the exemption for state authorization under the CSA in Washington State does not license distribution elsewhere.135 However, this does not negate the simple truth that a federal exemption recognized at the state level provides for lawful use in interstate commerce, allowing businesses to establish federal trademark eligibility.136 This is especially true considering Washington State is not the only state to which the federal exemption would apply.137 Should National Concessions Group, Inc. appeal, or others pursue registration under this theory, the Federal Circuit will sit in ripe position to clarify this distinction and pave the way for the expansion of intellectual property rights in a rapidly growing industry. The recency of TTAB's decision in In re National Concessions Group, Inc.138 illustrates just how timely and important this issue is for the Federal Circuit and others seeking federal trademark protections.139 Although Eteros [*192] Technologies, which dealt with the CIT's interpretation of the CSA specifically in the import-export context, is not a perfect procedural or jurisdictional match for the substantive right to obtain a federal trademark, reading the case as proposed here makes conceptual sense, especially given recent rapid legalization efforts across the states.140 This solution would allow the Federal Circuit to conclude that trademark applicants with medicinal cannabis products and services, or recreational products and services in states where cannabis is legal, can establish lawful use in commerce under 21 U.S.C. § 863(f)(1), while furthering the objectives of trademark law.

Reading the Eteros Technologies decision to extend the federal exemption in this way would mitigate the substantial risks of consumer confusion associated with these products by allowing consumers to identify the specific products they want to purchase preventing tragic accidents from repeating themselves, thereby furthering the goals of trademark law.141 Similarly, such a reading of Eteros Technologies furthers the Lanham Act's goal of protecting owners and businesses from copycats and counterfeiters.142 Federal trademark protections would grant cannabis farmers and business owners the ability to create and maintain distinctive brands, legal remedies when third parties infringe, increased access to funding and support from capital and financial institutions, and enhanced protections when engaging in interstate expansion.143 If cannabis growers and business owners were protected by federal trademark law, they would have greater opportunities to differentiate their products from competitors and receive the higher profits they are currently missing out on.144 Similarly, federal trademark law protection would reduce the risk of counterfeit cannabis products, as Akimov, LLC counterfeited Ferrara Candy Company's Nerds products.145

[*193] Granting cannabis farmers and businesses federal trademark protection over their brands would ease expansion into other states and enable growers to protect their brands and reputations in new markets without having to rely on state trademark protection.146 While unseen border lines in jurisdictions with several geographically contiguous states may present complications in applying this approach where some connected states qualify for the exemption and others do not, traditional conflict of laws principles would govern and resolve such interstate disputes, as would be true for any other law.147 Similarly, cannabis farmers' ability to export would improve if the federal government implemented and recognized a more standardized system of federal trademarks for these products.148 Eased access to other states and countries via both interstate and foreign commerce would enable farmers and companies to reach more consumers, achieve greater profits, and expand their businesses.