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“Open Sesame” Without Translation Won’t Open Door to Trademark Registration

by Courtney Seams | Feb 2, 2023 | Trademarks

The Trademark Trial & Appeal Board (Board) addressed, for the first time, whether an applicant is required to submit an English translation for a word that is created by spelling out the pronunciation of Chinese characters using Latin characters. The Board concluded that the mark required an English translation and upheld the examining attorney’s refusal to register the mark because there was no translation submitted. In re Advanced New Technologies Co., Ltd., Application No. 86832288 (TTAB Jan. 12, 2023) (Bergsman, Taylor, Heasley, ATJs).

Advanced New Technologies sought to register the mark ZHIMA for several goods and services classes. Advanced has a co-pending application for a mark using Chinese characters, where Advanced stated that “[t]he non-Latin characters in the mark translate to ‘ZHIMA’ and this means ‘SESAME’ in English.” According to Advanced, “the Chinese characters [] pronounced ZHIMA mean ‘sesame,’ but ‘Zhima’ itself has no meaning.” The application for ZHIMA was assigned to Advanced by Alibaba Group Holding Limited. Ali Baba is the hero of an Arabian Nights story who opens the door to a thieves’ den using the magical phrase “open sesame.” The use of the Chinese word for “sesame” on goods thus creates an impression that these goods and services bring customers access to something previously unattainable.

Under 37 C.F.R. § 2.32(a)(9), a trademark application must contain an English translation when the mark includes non-English wording. To determine whether a mark includes non-English wording and its meaning, the examining attorney may use dictionaries and search engines. If the examining attorney discovers that the mark contains non-English wording, the applicant must submit a translation. Following this statutory framework, the examining attorney in this case relied on the Chinese English Pinyin Dictionary, which translates “zhi ma” as “sesame” in English and required Advanced to submit a translation that “ZHI MA” means “sesame” in English.

Advanced argued that individuals fluent in English and Chinese would not transliterate “ZHI MA” back into its Chinese character counterparts, which actually do translate to “sesame.” In response, the examining attorney provided at least eight dictionary definitions where “zhima” was defined as “sesame.” Advanced then argued that the dictionaries were defining the Chinese characters, not the English transliteration because “ZHIMA” itself has no meaning in English.

The examining attorney modified the required translation statement to state that “ZHIMA is a transliteration of Chinese characters that means ‘sesame’ in English.” However, Advanced still refused to submit a translation, claiming that it was not required because there are no Chinese characters in the ZHIMA mark and the meaning of the Chinese characters cannot attach to a mark without them. The examining attorney provided information from many news articles where “zhima” was translated as “sesame.” For example, in articles referencing a Chinese version of Sesame Street, “Sesame” was translated as “Zhima.” The examining attorney also produced multiple websites discussing “zhima” products, all of which were sesame products.

The Board found that the many examples where “zhima” was translated as “sesame” by third parties demonstrated that ZHIMA was not an original [...]

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On the Border of Art and Trademark: First Amendment Trumps the Lanham Act

by Anisa Noorassa | Dec 8, 2022 | Trademarks

The US Court of Appeals for the Eleventh Circuit weighed trademark rights against free speech considerations and found that the First Amendment protected use of an artistic work that was not deliberately misleading. MGFB Properties Inc. et al. v. 495 Productions Holdings LLC et al., Case No. 21-13458 (11th Cir. Nov. 29, 2022) (Luck, Brasher, Hull, JJ.) (Brasher, J., concurring).

The suit was brought by MGFB Properties, Flora-Bama Management and Flora-Bama Old S.A.L.T.S. (collectively, the plaintiffs). The plaintiffs own and operate the Flora-Bama Lounge, Package and Oyster Bar on the Florida-Alabama border. The lounge has been in business since 1964 and is well known in the region. The plaintiffs registered their trademark FLORA-BAMA in 2013.

Viacom and 495 Productions (collectively, the defendants) produce reality television series, such as the hit 2009 series Jersey Shore. In light of Jersey Shore’s success, the defendants produced several spinoffs. In 2016 the defendants decided to develop a new spinoff based on “southern beach culture” and chose the term “Floribama” to describe “relaxing Florida beaches with the down-home Southern vibe of Alabama.” The defendants were aware of the name’s connection to the Florabama Lounge but used the term regardless to identify a specific stretch of the Gulf Coast (the Florida and Alabama coasts) and inserted dialogue into the show to explain the term. The show’s logo emphasized its connection to the Jersey Shore franchise:

The plaintiffs argued that the defendants’ use of “Floribama” was a violation of the Lanham Act and caused unfair confusion and damage to their brand. The district court granted summary judgment for the defendants. Plaintiffs appealed.

The Eleventh Circuit upheld the district court’s judgment that the defendants’ First Amendment rights as the creators of an artistic work outweighed the plaintiffs’ interest in their trademark and in avoiding confusion around their brand: “[c]reative works of artistic expression are firmly ensconced within the protections of the First Amendment.” In reaching its outcome, the Court applied the 1989 Rogers v. Grimaldi test.

Under the first prong of the Rogers test, “an artistically expressive use of a trademark will not violate the Lanham Act unless the use of the mark has no artistic relevance to the underlying work whatsoever.” Here, the Eleventh Circuit found that the defendants’ use of the term “Floribama” to describe the geographic area featured in Floribama Shore and the subculture of that region satisfied the first element of the Rogers test. The Court held that it was sufficient for the defendants’ use of “Floribama” to be relevant to their show, even if the term was not “necessary” to production of the show.

Under the second prong of the Rogers test, the Eleventh Circuit found that the defendants’ use of “Floribama” was not explicitly misleading “as to the source or content of the work” such [...]

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Court Uncorks New Way to Serve Trademark Complaints

by Amol Parikh | Nov 29, 2022 | Trademarks

The US Court of Appeals for the Ninth Circuit concluded that Section 1051(e) of the Lanham Act permits a plaintiff in a district court case to serve a complaint against a foreign defendant via the Director of the US Patent & Trademark Office (PTO). San Antonio Winery, Inc. v. Jiaxing Micarose Trade Co., Ltd., Case No. 21-56036 (9th Cir. Nov. 14, 2022) (Siler, Callahan, Thomas, JJ.)

San Antonio Winery is a Los Angeles-based winery best known for its Stella Rosa brand of wines. The winery is owned and operated by the Riboli family. San Antonio has registered the trademarks RIBOLI and RIBOLI FAMILY, which it has used since at least 1998 to market its wines and other products.

Jiaxing is a Chinese company that has sold products using the Riboli name. In 2018, Jiaxing registered the mark RIBOLI for use in connection with articles of clothing and shoes. In 2020, Jiaxing applied to register the mark RIBOLI for use with additional types of products, including wine pourers, bottle stands, containers, cocktail shakers, dishware and various other kitchen and household items.

After learning that Jiaxing was using the Riboli name to sell products in the United States, San Antonio filed a complaint asserting Lanham Act claims for trademark infringement, trademark dilution and false designation of origin, as well as related state-law claims. San Antonio also sought an injunction prohibiting Jiaxing from using the RIBOLI mark in connection with its products, an order canceling Jiaxing’s 2018 registration of the RIBOLI mark, and an order either directing Jiaxing to abandon its 2020 application to register RIBOLI for additional uses or prohibiting the PTO from granting the application.

Because Jiaxing is a Chinese company, San Antonio’s service of process was governed by rules for serving parties abroad, such as by the Hague Convention. Concerned with the amount of time it might take to effect service under the Hague Convention, San Antonio instead sought to serve Jiaxing under Section 1051(e) of the Lanham Act, which applies to foreign domiciliaries who apply to register a trademark. Section 1051(e) states that if a trademark applicant is not domiciled in the United States, the applicant may designate the name and address of a person in the United States who may be served with notices or processes in proceedings affecting the mark. If the designated person cannot be found at the address, the notices or processes may be served on the PTO Director.

Seeking to avail itself of Section 1051(e), San Antonio inquired whether the US-based lawyer who had represented Jiaxing in connection with its trademark applications would accept service on Jiaxing’s behalf. When the lawyer did not respond, San Antonio served the district court complaint on the PTO Director, who then sent a letter to Jiaxing confirming service of process was effectuated pursuant to Section 1051(e).

After Jiaxing did not appear to defend itself in the action, San Antonio filed a motion for default judgment. The district court denied the motion on the ground that Jiaxing had not [...]

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Press # For Options, but Not for a Trademark Registration

by Brennen Baylor | Nov 29, 2022 | Trademarks

In a precedential opinion addressing the most fundamental requirement for trademark protection, the Trademark Trial & Appeal Board (Board) affirmed the US Patent & Trademark Office’s (PTO) refusal to register a “#” based mark on the ground that it fails to function as a mark. In re Pound Law, LLC, Ser. No. 87724338 (TTAB Nov. 9, 2022) (Adlin, Lynch, Larkin, ATJ)

Pound Law, claiming acquired distinctiveness under Section 2(f) of the Lanham Act, sought to register #LAW as a mark for providing legal services and legal referral services to consumers seeking a lawyer where legal representation or referral is initiated by phone. During prosecution, the Examining Attorney refused registration on the ground that #LAW failed to function as a service mark, reasoning that a consumer would only understand that dialing #LAW would put them in contact with some legal service provider, but not specifically Pound Law. Pound Law appealed.

Pound Law argued that the Examining Attorney improperly applied a per se rule against mnemonic or vanity telephone number marks as being incapable of functioning as a mark identifying the source of goods or services. In response, the Examining Attorney asserted that the PTO refused registration only after engaging in a specimen-based determination tailored to the #LAW mark. The Examining Attorney argued that, based on the manner of using the mark with a telephone, a consumer would regard #LAW only as a means of contacting Pound Law and concluded that #LAW does not indicate the source of legal services to be rendered, only a means by which legal services might be obtained.

To assess whether #LAW conveys an informational message or functions as a source identifier, the Board considered whether the nature of #LAW affects consumer perception of the asserted mark. The Board cited examples #LAW or #law being used throughout the legal industry, including as a hashtag in social media content. The Board reasoned that, in the context of social media, a hashtag functions as a searchable keyword, not as a source identifier. Pound Law argued that it ran radio advertisements vocalizing #LAW as “pound law” to explain to consumers that the asserted mark is not a hashtag.

The Board did not find Pound Law’s evidence persuasive, explaining that Pound Law’s radio advertising was insufficient to instill Pound Law as the source of the legal services in a consumer’s mind since “there is no correct pronunciation of a trademark, and consumers may pronounce a mark differently than intended by the brand owner.” The Board also pointed to evidence of Pound Law’s “extensive visual-only advertising,” which does not distinguish the use of an octothorpe as specifically a pound sign on a telephone keypad as opposed to a hashtag used on social media platforms. The Board concluded that many consumers would understand and pronounce #LAW as a hashtag (i.e., vocalized as “hashtag law”) “given the prevalence of social media and hashtags.” On this point, the Board highlighted “quite persuasive” evidence of numerous examples from the record showing third parties—e.g., law firms, legal [...]

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The Saddest Hour? Closing Time for Trademark Cancellation Petition

by Tim Dunker | Oct 6, 2022 | Trademarks

In a precedential decision, the Trademark Trial & Appeal Board (Board) denied a petition to cancel a trademark registration based on priority. The Board explained that the petitioner bears a higher burden of proof to show prior use when it has amended its trademark application during prosecution to allege an earlier use date. JNF LLC v. Harwood Int’l Inc., Cancellation No. 92070634 (TTAB Sept. 21, 2022) (Wellington, Greenbaum, Heasley, ATJ)

On October 6, 2014, Harwood International applied to register the standard character mark HAPPIEST HOUR on the Principal Register for “bar and restaurant services.” The application matured into a registration on July 26, 2016. Almost two years later, on May 1, 2018, JNF applied to register the mark THE HAPPIEST HOUR in standard characters on the Principal Register for “restaurant and bar services.” In its application, JNF claimed to have first used the mark anywhere and in commerce “at least as early as 10/00/2014.” The examining attorney assigned to JNF’s application issued an office action citing Harwood’s HAPPIEST HOUR registration as a bar to registration. JNF then amended its claimed date of first use to September 7, 2014. JNF subsequently filed a petition to cancel Harwood’s registration and further requested suspension of its application pending disposition of the cancellation proceeding. Harwood answered the petition and admitted that its registered mark HAPPIEST HOUR was cited as confusingly similar to JNF’s THE HAPPIEST HOUR application but denied that JNF had established prior rights to the mark.

The Board explained that for priority purposes, Harwood may rely on the filing date of the underlying application that matured into its involved registration. The Board further explained that JNF bears the burden of proving that its mark was “previously used in the United States,” before Harwood’s constructive filing date of October 6, 2014. The Board also noted that while a petitioner must ordinarily prove its priority entitlement by a preponderance of the evidence, in the circumstances of this case, the burden was heavier. Because JNF alleged a first use date of “at least as early as 10/00/2014” when it filed its application to register THE HAPPIEST HOUR, the date presumed for purposes of examination was the last day of the month, October 31, 2014—several weeks after Harwood’s constructive use date of October 6, 2014.

As the Board explained, although JNF subsequently amended its date of earliest use, that amendment came with a cost. The Board explained that where an applicant has stated an earliest use date under oath but then amends the oath and attempts to show an earlier date, the applicant is under a heavier burden of proof: clear and convincing evidence. Citing to Federal Circuit precedent, the Board further explained that the original allegation of first use date may be considered to have been made against interest at the time of filing. The Board found that this rationale applied with even greater force in the current situation because the alleged dates were very close to Harwood’s constructive use date and because JNF only [...]

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It Can Take Three Appeals to Make a Claim Construction Go “Right”—or Three Bites by Apple

by McDermott Will & Emery | Sep 22, 2022 | Patents

In a nonprecedential opinion on remand from the US Court of Appeals for the Federal Circuit and a US Patent & Trademark Office (PTO) Director-granted request for review, the Patent Trial & Appeal Board (Board) reconstrued claim terms it had previously construed in consideration of the patent specification, prosecution history and Federal Circuit construction of similar terms in a related case. Apple Inc. v. Personalized Media Communications, LLC, IPR2016-00754, IPR2016-01520 (P.T.A.B. Sept. 8, 2022) (Turner, APJ.)

In March 2016, Apple filed a petition to institute an inter partes review (IPR) against a patent (’635 patent) owned by Personalized Media Communications, LLC (PMC). After PMC filed its Patent Owner Preliminary Response (POPR), the Board instituted the IPR on some, but not all, of Apple’s requested grounds. Per Board procedure, PMC filed its Patent Owner Response (POR) and a contingent motion to amend its patent’s claims. In response, Apple filed a reply and an opposition to the contingent motion, and PMC filed a reply to Apple’s opposition. After oral argument the Board issued a Final Written Decision (754-FWD) finding all challenged claims unpatentable and denying the contingent motion to amend. PMC first sought rehearing of the Board’s decision and, after rehearing was denied, appealed the Board’s decision to the Federal Circuit.

Similarly, in July 2016, Apple filed another petition against the same PMC patent. After considering PMC’s POPR, the Board instituted an IPR on some of Apple’s requested grounds. PMC again filed a POR and a contingent motion to amend, to which Apple filed a reply and opposition (to which PMC filed its reply and Apple a sur-reply). Again, the Board held an oral hearing and issued a Final Written Decision (FWD) finding all challenged claims unpatentable and denying the contingent motion to amend. PMC again sought rehearing of the Board’s decision and, after rehearing was denied, appealed the Board’s decision to the Federal Circuit.

On appeal of each proceeding, PMC moved, and the Federal Circuit granted remand in light of and consistent with the 2021 Supreme Court decision in U.S. v. Arthrex, Inc., where a five-justice majority found that the appointment of Board administrative patent judges was unconstitutional and a seven-justice majority concluded that the remedy was to vest the PTO Director with authority to overrule Board decisions.

On remand to the PTO, PMC filed a request for director review, which the Commissioner for Patents (performing the functions and duties of the PTO Director) granted. The Commissioner’s Granting Order agreed with PMC’s argument that the Board, in these two cases, had construed the claim terms “encrypted” and “decrypted” in a manner that could include “scrambling and descrambling operations on digital information, but could also include … on analog information” and was inconsistent with the Federal Circuit’s partial reversal of the Board’s construction in yet another IPR proceeding (755-IPR regarding another related PMC patent) between Apple and PMC. As to the related patent IPR, the Federal Circuit ultimately construed “encrypted digital information transmission including encrypted information” as “… limited [...]

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Oh, Fudge. TTAB Finds Curse Word Fails to Function as Trademark

by Sarah Bro | Sep 8, 2022 | Trademarks

The US Patent & Trademark Office (PTO) denied registration of several US trademark applications for the mark FUCK, even though the applicant had overcome a prohibition on the registration of “immoral or scandalous” trademarks as a violation of the First Amendment in the Supreme Court’s 2019 decision in Iancu v. Brunetti. The applicant also had previously secured registration of the mark FUCT. The PTO nevertheless denied registration on grounds that the familiar curse word did not function as a trademark. In re: Brunetti, Ser. Nos. 88308426; 88308434; 88308451; 88310900 (TTAB Aug. 22, 2022) (Bergsman, Dunn, Lebow, Administrative Trademark Judges).

The Trademark Trial & Appeal Board (Board) issued a precedential decision affirming the PTO’s refusal to register the FUCK mark for a variety of goods and related services, including cellphone cases, sunglasses, jewelry, watches, bags and wallets. The Board found that the word FUCK expresses well-recognized sentiments and that consumers are accustomed to seeing the word in widespread use by many different sources. As a result, the word failed to create the commercial impression of a source indicator and therefore failed to function as a trademark to distinguish the goods from others.

BACKGROUND

Artist and entrepreneur Erik Brunetti applied to register the mark FUCK in relation to a wide variety of wearable goods, electronics accessories and related retail, marketing and business services in 2019 while his appeal to the Supreme Court regarding the FUCT mark was still pending. When the Supreme Court issued its decision, the FUCK applications were removed from suspension and could no longer be refused on grounds that the mark comprised “immoral or scandalous” material. The PTO examining attorney re-examined the applications and refused registration on the so-called “failure to function” ground, finding that the mark was a term that did not function as a trademark to indicate the source of the applicant’s goods or services and to identify and distinguish them from others. Brunetti appealed to the Board.

In response to Brunetti’s argument that there was no statutory basis for a failure to function refusal, the Board made clear that the PTO is statutorily constrained to register a mark on the Principal Register “if and only if it functions as a mark.” Matter that does not operate to indicate the source or origin of the identified goods or services and distinguish them from those of others does not meet the statutory definition of a trademark and may not be registered. The Board reminded applicants that not every designation adopted with the intention that it perform a trademark function necessarily accomplishes that purpose.

Matter may be merely informational and fail to function as a trademark if it is a common term or phrase that consumers are accustomed to seeing used by various sources to convey ordinary, familiar or generally understood concepts or sentiments. The critical inquiry in determining whether a proposed mark functions as a trademark is how the relevant public perceives it.

The Board described the Examining Attorney’s evidence supporting the failure to function [...]

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Rebuttal Presumption of Irreparable Harm Still Alive When Assessing Trademark Preliminary Injunctions

by Amol Parikh | Aug 25, 2022 | Trademarks

In one of the first decisions to construe the Trademark Modernization Act of 2020 (TMA), the US Court of Appeals for the Third Circuit found that a district court properly applied the TMA’s rebuttal presumption of irreparable harm when it denied a trademark owner’s motion for a preliminary injunction. Nichino America, Inc. v. Valent U.S.A., LLC, Case No. 21-1850 (3rd Cir. Aug. 12, 2022) (Bibas, Matey, Phipps, JJ.)

Nichino and Valent sell pesticides for farming. Since 2004, Nichino has offered a trademarked product known as CENTAUR. Valent trademarked a competing product called SENSTAR in 2019, giving it a logo resembling CENTAUR’s colors, fonts and arrow artwork. Both pesticides are used in the same geographic areas against many of the same insects, and both are sold to farmers through distributors. SENSTAR is a liquid and uses a unique combination of two active chemicals. It costs $425 per gallon and ships in cases containing four one-gallon containers. CENTAUR is manufactured as a solid and sold by the pallet, with each pallet containing 622 pounds of pesticide packed into bags and cases. CENTAUR costs $24 per pound.

Nichino sued Valent for trademark infringement and sought a preliminary injunction against SENSTAR’s launch, arguing that Valent’s use of the SENSTAR mark would create confusion among consumers. The district court found that Nichino narrowly demonstrated that its infringement claim would likely succeed but explained that “there is not an abundance of evidence of likelihood of confusion” between the products. As part of its injunction analysis, the district court applied the TMA to presume Nichino would suffer irreparable harm without an injunction. However, the court noted that the presumption was rebuttable. The court credited Valent’s evidence of a sophisticated consumer class that makes careful purchases and noted the lack of any evidence of actual consumer confusion. The court also found that Nichino failed to proffer any affirmative evidence that it would suffer irreparable harm. Accordingly, the district court found that the presumption of irreparable harm was rebutted, and therefore denied the injunction request. Nichino appealed.

Nichino argued that the TMA precluded the district court from finding no irreparable harm. The Third Circuit, however, found that the district court “admirably navigated” the TMA’s rebuttable presumption by finding that Valent rebutted the presumption and Nichino did not independently show irreparable harm. The Court explained that the three-step process for applying the TMA’s rebuttable presumption requires the following:

The court must assess the plaintiff’s evidence only as it relates to a likelihood of success on the merits.
If the plaintiff’s evidence establishes likely trademark infringement, the TMA is triggered, and the burden of production shifts to the defendant to introduce evidence sufficient for a reasonable factfinder to conclude that the consumer confusion is unlikely to cause irreparable harm.
If a defendant successfully rebuts the TMA’s presumption by making this slight evidentiary showing, the presumption has no further effect.

The Third Circuit found that the district court correctly followed this three-step analysis in finding that Valent rebutted the TMA’s [...]

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Holdover Trademark Licensee Status Can’t Do Heavy Lifting on “Exceptionality”

by Brennen Baylor | Aug 4, 2022 | Trademarks

The US Court of Appeals for the Sixth Circuit addressed issues of enhanced remedies in a dispute regarding the sale of weightlifting equipment beyond the expiration of a licensing agreement between the involved parties. Pointing to the different standard required to prove a violation and damages, the Court ultimately reduced a trademark infringement award to about a quarter of the amount initially awarded. Max Rack, Inc. v. Core Health & Fitness, LLC, et al., Case No. 20-3598 (6th Cir. July 14, 2022) (Cole, Rogers, Murphy, JJ.)

In 2006, Max Rack exclusively licensed its patents and trademarks relating to weightlifting racks to Star Trac Strength. Core Health subsequently acquired Star Trac and its licensing agreements. The final patent covering the Max Rack equipment expired on November 21, 2015, thereby terminating the licensing agreements between Max Rack and Core Health. The agreements permitted Core Health to sell any remaining Max Rack units for six months following expiration of the license.

Following expiration of the licensing agreements, Max Rack learned that Core Health failed to update web pages, marketing materials and owner’s manuals to reflect the termination of Core Health’s affiliation with Max Rack. Core Health’s failure to scrub references to “Max Rack” extended to third-party sellers’ websites advertising Core Health’s competing “Freedom Rack” product using the Max Rack name. Core Health also sold 271 more units manufactured as Max Racks after the license expired, 238 of which were sold during the six-month grace period. Of the remaining 33 units, 24 were sold after the six-month window had closed, and nine were alleged to have had their labels changed from Max Rack to Core Health’s Freedom Rack. Core Health further failed to pay Max Rack royalties for any of the 271 sales made after the license expired.

Max Rack brought two federal claims under 15 U.S.C. §§ 1114(1)(a) and 1125(a)(1)(A), alleging trademark infringement and unfair competition. Max Rack also brought three claims under Ohio’s Deceptive Trade Practices Act, alleging that Core Health passed off the Max Rack as its own machine and caused a likelihood of confusion regarding the source of the machine and regarding Core Health’s affiliation with the Max Rack trademark. The jury awarded Max Rack $1 million in damages and $250,000 in Core Health’s profits. Ruling on post-trial motions, the district court overturned the $1 million damages award for lack of evidence of any consumer confusion but enhanced the $250,000 award to $500,000 and further awarded Max Rack attorneys’ fees. Both parties appealed.

The Sixth Circuit sidestepped the fact-laden analysis to determine whether Core Health’s actions created a likelihood of consumer confusion, reasoning that the dispute related to the “holdover licensee.” Citing its own precedent and precedent from the Third, Fifth, Seventh and Eleventh Circuits, the Court applied a much more objective standard, finding that unauthorized use of a licensed trademark by a licensee after the license has expired is by itself sufficient to establish a likelihood of confusion in the mind of the consumer.

Although the Sixth Circuit used [...]

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Counterfeit Dealer Gets Smoked in Trademark Preliminary Injunction Proceeding

by Tessa Kroll | Jun 2, 2022 | Copyrights, Trademarks

The US Court of Appeals for the Ninth Circuit affirmed a preliminary injunction barring the defendant from selling counterfeit e-cigarette and vaping products bearing the plaintiff’s logo because the plaintiff’s psychoactive products were legal and could support a valid trademark. AK Futures LLC v. Boyd St. Distro, LLC, Case No. 21-56133 (9th Cir. May 19, 2022) (Kleinfeld, Fisher, Bennett, JJ.)

AK Futures manufactures e-cigarettes and vaping products, including delta-8 THC goods marketed under its “Cake” brand. Delta-8 THC is a psychoactive compound found in the Cannabis sativa plant, which encompasses both hemp and marijuana. The compound is similar in effect to delta-9 THC, the primary psychoactive agent in marijuana, but delta-8 THC is typically manufactured from hemp-derived cannabidiol (CBD). The cultivation and possession of hemp was legalized by the Farm Act in 2018.

AK Futures sued Boyd Street Distro, a Los Angeles purveyor of smoke products, for trademark and copyright infringement. Boyd Street sold virtually identical counterfeit Cake-branded e-cigarettes and vaping products containing delta-8 THC. At the time of suit, AK Futures had a registered copyright protecting its Cake logo—a stylized “C” overlaying a two-tier cake—and pending trademark applications for six marks incorporating the word “Cake” or the Cake logo for use in connection with e-cigarette products. The district court granted AK Futures’ motion for preliminary injunction. Boyd Street appealed.

On appeal, Boyd Street conceded the copyright claim, but argued that AK Futures could not own a valid trademark in connection with its e-cigarettes and vaping products because the sale of delta-8 THC was prohibited under federal law. In response, AK Futures argued that the 2018 Farm Act legalized delta-8 THC and products containing the compound.

The Ninth Circuit agreed that AK Futures’ use of the marks in commerce was lawful and could give rise to trademark priority. The Court found that the “plain and unambiguous” text of the Farm Act indicated that delta-8 THC products were lawful. The Farm Act removed “hemp” and “tetrahydrocannabinols in hemp” from Schedule I in the Controlled Substances Act, where “hemp” is defined as “the plant Cannabis sativa L. and any part of that plant, including . . . all derivatives, extracts, [and] cannabinoids . . . with a delta-9 concentration of not more than .3 percent.” The Court noted that the delta-9 THC concentration level was the only statutory metric for distinguishing marijuana from hemp, and that the terms “derivative, extract, or cannabinoid” were substantially broad. The Court thus concluded that “hemp” encompasses delta-8 THC products that contain no more than 0.3% delta-9 THC.

Boyd Street argued that the US Drug Enforcement Agency had interpreted the Farm Act as not applicable to delta-8 THC because it is “synthetically derived” and argued that US Congress never intended the Farm Act to legalize psychoactive substances. The Ninth Circuit perfunctorily dismissed these arguments based on the clear and unambiguous statutory language. Since the Cake-branded products allegedly contained less than 0.3% delta-9 THC, the Court held that AK Futures was likely to succeed in demonstrating that its [...]

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