CBD Trademarks: Attorney Chelsie Spencer Published

Chelsie Spencer’s article regarding the United States Patent and Trademark Office’s treatment of cannabidiol (“CBD”) and hemp-derivative goods trademark applications has been published today in The Tipsheet. To view a copy of the article on CBD trademarks, continue reading below or click here: Cannabidiol: The Disjointed Stance at the USPTO Continues.

As clocks across the United States struck midnight on New Year’s Eve, the American hemp industry had reason to celebrate: January 1, 2019, marked the effective date of amendments by the Agricultural Improvement Act of 2018 (the 2018 Farm Bill) to the Agricultural Marketing Act of 1946. Spearheaded by Senators James Comer and Mitch McConnell, the 2018 Farm Bill federally descheduled hemp sourced in accordance with the Bill and carried a clear message to regulatory agencies across the nation: stop interfering with the United States hemp growth and hemp product economy. The Bill was tailored to address many of the regulatory issues caused by agencies misinterpreting the 2014 Farm Bill. These issues were outlined in my prior article, published in The TIPSHEET, Vol. 13 No. 2, available here.

To address the DEA’s stance that cannabidiol (CBD) was a Schedule I substance, Congress amended the definition of “hemp” to include the term “cannabinoid.” Specifically, the 2018 Farm Bill defines “hemp” as

the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.

Agricultural Improvement Act of 2018 § 10113 (emphasis added). Cannabinoids are chemical compounds found within the Cannabis sativa L plant. At least 113 naturally occurring cannabinoids have been identified in the cannabis plant, including CBD, tetrahydrocannabinol (THC), and lesser known compounds such as cannabigerol and cannabichromene. Through the new statutory definition, Congress clarified that all cannabinoids extracted from hemp sourced in accordance with the 2018 Farm Bill are legal.

Though the 2014 Farm Bill allowed “any part” of the hemp plant to be utilized, the United States Drug Enforcement Agency took the stance that only the portions of the Cannabis sativa L plant previously excluded from the CSA’s prior definition of “marijuana” could be used. This position was directly contrary to the text of the 2014 Farm Bill. In light of the DEA’s prior interference and muddling of regulatory affairs concerning properly sourced hemp, Congress went a step further in the 2018 Farm Bill and amended the federal Controlled Substance Act (CSA). The CSA’s definition of marijuana was amended to exclude “hemp, as defined in section 297A of the Agricultural Marketing Act of 1946.” Id. § 12619(a)(2). Moreover, the definition of tetrahydrocannabinols was modified to exclude “tetrahydrocannabinols in hemp” from scheduling. Id. § 12619(b). In case the DEA or other government agencies tries to regulate hemp grown pursuant to the 2018 Farm Bill without authority, Congress included a rule of construction explicitly instructing States and tribal nations that nothing in the Act authorizes interference with the interstate transport of hemp or hemp products.

Considering the direct clarity offered by the 2018 Farm Bill, one would think that the United States Patent and Trademark Office’s prior disjointed stance on registration of hemp-derivative goods would have self-resolved with the new legislation. Guess again. From January 1, 2019, to January 29th, the USPTO has issued at least 127 Office Actions containing an unlawful-use refusal. Given the Office’s history of misinterpreting the applicable federal law concerning goods derived from properly sourced hemp, it is no surprise that the Office continues to issue refusals that are contrary to federal law.

Though the CSA was amended on January 1, 2019, to exclude hemp cannabinoids sourced pursuant to § 297A, many trademark examiners seem to be wholly unaware that the law has changed and continue to issue refusals based on the now-defunct CSA definition of marijuana. See, e.g., Jan. 2, 2019 Office Action, U.S. Trademark App. Ser. No. 87783096 (“The attached Internet evidence showing that [the good] contains cannabidiol (CBD) plainly indicates that applicant’s identified goods include items that are prohibited by the CSA.”); Jan. 23, 2019 Office Action, Ser. No. 87802378 (“Applicant’s goods and/or services consist of, or include, items or activities that are prohibited by the CSA, namely, cannabinoids and vape cartridges containing cannabinoids.”)Jan. 22, 2019 Office Action, U.S. Trademark App. Ser. No. 87798876 (refusing registration based on the position that CBD is a Schedule I substance and citing expired CSA provisions that were amended by the 2018 Farm Bill); Jan. 22, 2019 Office Action, U.S. Trademark App. Ser. No. 88132667 (citing prior definition of “marijuana” under the CSA).

What is most concerning is that the USPTO has now transformed a prior advisory refusal into a basis for an initial unlawful-use refusal. Last year, the USPTO began issuing advisory opinions to applicants whose CBD products may be subject to the Federal Food and Drug Cosmetic Act (FDCA). The Advisory was simply that—an advisory to applicants that the Food and Drug Administration (FDA) may consider CBD a new drug subject to approval. The advisory refusals stated that if the FDA has not authorized the sale of such goods an unlawful-use refusal may issue. In support of its position, trademark examiners cited to a non-binding “Question and Answer” webpage located on the FDA’s website.

On the very day President Trump signed the 2018 Farm Bill into law, FDA Commissioner Scott Gottlieb issued a press release announcing that the FDA does not consider CBD to be a dietary supplement, but rather a new drug subject to regulation. The press release noted that the FDA would hold a public meeting for comment to discuss potential regulatory pathways for CBD. The release also noted that the FDA believes it is illegal to sell products subject to the FDCA to which CBD has been added because CBD has been the subject of an Investigational New Drug (IND) application. In reality, the referenced IND covered a specific substance: Epidiolex®. Epidiolex® is the only prescription drug sold in the United States which meets the requirements for placement and scheduling into Class 5 of the CSA, which requires that the prescription drug be approved by the FDA and contain THC below 0.1%. See Schedule of Controlled Substances: Placement in Schedule V of Certain FDA-Approved Drugs Containing Cannabidiol; Corresponding Change to Permit Requirements, 83 Fed. Reg. 48950 (Sept. 28, 2019).

However, the FDCA, as amended by the Dietary Supplement Health and Education Act (DSHEA) of 1994, excludes from the definition of “dietary supplement” any article that is approved as a new drug and any article “authorized for investigation as a new drug . . . for which substantial clinical investigations have been instituted and for which the existence of such investigations have been made public” unless the article was “before such approval, . . . or authorization marketed as a dietary supplement or as a food.” FDCA § 201(ff)(3)(B). Essentially, the exclusionary clause provides that if the article was marketed as a dietary supplement or food before the IND approval on the article, it can continue to be marketed as a dietary supplement. Thus, CBD may qualify as a dietary supplement if it can be shown that it was marketed as a dietary or supplement or food before the new drug approval. The existing IND authorization for EPIDIOLEX occurred on May 24, 2014, and CBD products were marketed as dietary supplements prior to that date. To date, we have no court decision or other regulatory guidance on the issue.

Clearly, the regulatory status of CBD with the FDA is unsettled and those in the industry look forward to public comment and the public meeting to be held by the FDA. However, Office Actions issued after the effective date of the 2018 Farm Bill indicate that the USPTO has taken a definitive stance on this quite-unsettled issue. The Office recently instructed one applicant that its specimen of record plainly indicate[d] that applicant’s identified goods/services include items and/or activities that are prohibited by the FDCA, namely, supplements containing CBD and that such goods are currently being marketed, promoted or offered for sale to consumers. Because these goods are prohibited by the FDCA, the applied-for mark, as used in connection with such goods is not in lawful use in commerce. Jan. 18, 2019 Office Action, U.S. Trademark App. Ser. No. 87794255.

Thankfully, a small subset of trademark examiners appear to be aware that the law has changed. In response to a Request for Reconsideration on a final refusal, one examining attorney instructed the applicant that it could amend its identification of goods to either “[m]edicinal herbs derived from hemp” or “medicinal herbs derived from the plant Cannabis sativa L. with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Jan. 19, 2019 Notation to File, U.S. Trademark App. Ser. No. 87433650. Mature stalk and sterilized seed of Cannabis sativa L are excluded from the CSA definition of marijuana. Setting aside the fact that there is no requirement to source cannabinoids or other hemp derivatives from the seed or mature stalk of the hemp plant, the second option presented shows that the Office has at least some familiarity with the recent changes.

Processing hemp-derivative applications still requires a high level of knowledge of relevant cannabis laws, including the CSA, the Farm Bill, FDA regulations, the FDCA, and more. Statutes and regulations regarding hemp continue to evolve and change at a rapid rate. Technical knowledge of the Cannabis sativa L plant remains helpful in overcoming the educational hurdles applicants must clear with the Office.

However, there is hope that the USPTO may cure its ever-changing review methodology of hemp-derivative goods applications. A handful of Office Actions issued toward the latter end of January include the statement that “the Agricultural Improvement Act of 2018 (2018 Farm Bill) has changed the definition of marijuana under the CSA to exclude industrial hemp which has a delta-9 tetrahydrocannabinol content of no more than 0.3 percent on a dry weight basis.” Jan. 23, 2019 Office Action, U.S. Trademark App. Ser. No. 87883680; Jan. 23, 2019 Office Action, U.S. Trademark App. Ser. No. 87833575. These Office Actions require the applicants to submit additional information about the hemp-derivative goods, such as product brochures or fact sheets and to submit a written statement indicating that the goods comply with the CSA. The applicants must answer a myriad of questions including whether the goods are sourced from oil or extract, whether the sourcing hemp contains no more than 0.3% THC, whether the hemp was sourced in accordance with the 2018 Farm Bill, and whether oils or extracts from plants other than hemp will be included in the good, among others.

With applicants’ self-certifying under penalty of perjury that their hemp-derivative goods do not violate the CSA, it is difficult to ascertain why the Office is aligning itself with its prior, often intrusive, review methodology. In the past, the Office requested information from applicants that often included trade secret and other confidential information. When applicants produced that information or attempted to educate the Office on the 2014 Farm Bill, they were simply met, in large part, with one to two sentence Office Actions maintaining the denial that did not address the evidence presented in support of registration.

What is clear post-enactment of the 2018 Farm Bill is that the Office remains disorganized in its review of applications for hemp-derivative goods and an environment of uncertainty still abounds for applicants. Invalid refusals continue to cost applicants time, money, and substantial resources to overcome. Applicants are not charged with educating the Office on federal law and the registrability of their goods. Is it too much to expect our USPTO, a fee-funded agency, to have knowledge of current federal laws? Considering that an examining attorney’s role is to review applications to determine whether federal law permits registration, one would think not.

Here in Texas, representing hemp and CBD companies still involves inherent risk. Our criminal statutory definitions of marijuana and THC continue to encompass hemp. See Tex. Health & Safety Code § 481.002 (“‘Marihuana’ means the plant Cannabis sativa L.”). Depending on the locality, many police departments are actively enforcing these prohibitions. Possession of hemp-derivative goods, which are legal under federal law, are leading to the arrests of many individuals across our State. If a product presents with detectable or trace THC upon testing, law enforcement may elect to pursue criminal charges. Thus, though the Office may permit registration for a hemp-derivative good sourced from a hemp plant containing less than 0.3% THC, attorneys in Texas still need to ensure that any potential applicant of hemp-derived goods in Texas is able to secure independent laboratory testing with a cannabinoid potency profile to ensure that their goods test with non-detectable THC levels.

Our legislature is currently convened for its 87th session and will be in session until May 27 of this year. With at least thirty-seven cannabis-related bills, there is hope that the conflict between current Texas and federal law regarding hemp will be remedied. Until then, I conclude in the same manner as my prior article: Welcome to the (continuing) wild west of hemp and CBD branding and compliance issues.

Chelsie Spencer is an attorney with Ritter Spencer Cheng PLLC in Addison. She is licensed in Texas and Florida, both states with permissive medical marijuana statutes. Her primary practice is in trademark and copyright law, transactional and litigation. She also practices in the areas of medical marijuana, hemp, and CBD and represents clients within those industries for business and compliance issues. If you have a CBD trademark that you are seeking to register, please contact us today.